Shares in HSBC Holdings (LON:HSBA) have fallen deep into the red in London this morning as the group’s full-year profits fell short of estimates. Europe’s biggest lender further disclosed that the tax reform in the US had weighed on its capital position.
As of 08:44 GMT, HSBC’s share price had given up 4.08 percent to 733.60p. The drop is weighing on the benchmark FTSE 100 index which currently stands 0.07 percent in the red at 7,242.37 points.
HSBC posts results
HSBC reported in a statement this morning that its reported profit before tax had soared 141 percent to $17.2 billion last year, with the group’s ‘Pivot to Asia’ strategy generating returns and driving over 75 percent of reported and adjusted profit. Reuters, however, notes that the result came in below the $19.7-billion average estimate of 17 analysts polled by Thomson Reuters. Reported revenue meanwhile rose seven percent to $51.4 billion.
The lender further disclosed that the recent changes in US tax legislation had reduced the group’s capital position by nine percent, and that it had planned additional Tier 1 Capital issuance of between $5 billion to $7 billion in the first half of the year.
“These good results demonstrate the strength and potential of HSBC. All our global businesses grew adjusted profits and we concluded the transformation programme that we started in 2015,” the group’s outgoing chief executive Stuart Gulliver commented in the statement. “It has been my great privilege to lead HSBC for the last seven years.”
Analysts weigh in
“The results were decent enough, but nothing earth-shattering,” Hugh Young, head of Asia at Standard Life Aberdeen, one of the bank’s top shareholders, told Bloomberg, adding that Europe’s biggest lender was “firmly on the course set by Stuart and Douglas Flint with more to go for; it would be great if they get to a 10-percent return on equity from the current 5.9 percent,” referring to the industry’s measure of profitability.
HSBC is the first FTSE 100 lender to update investors on its full-year performance this reporting season, with Lloyds (LON:LLOY) to follow tomorrow.