HSBC profit plummets by 33% to £10.2 billion
HSBC has reported a 33% fall in pre-tax profit for 2019 to $13.35 billion (£10.2 billion), below analysts’ expectations and those of its own chief executive.
The bank said the drop was due to “a goodwill impairment” of $7.3 billion (£5.6 billion).
“This arose from an update to long-term economic growth assumptions, which impacted a number of our businesses,” HSBC’s annual results statement said.
Interim chief executive Noel Quinn indicated more was expected of the company.
He said: “The group’s 2019 performance was resilient, however parts of our business are not delivering acceptable returns.”
The bank has its headquarters in London but almost half of its revenue and nearly 90% of its profits in 2018 came from Asia, with much of that coming from Hong Kong.
HSBC said it will “continue to monitor the recent coronavirus outbreak, which is causing economic disruption in Hong Kong and mainland China and may impact performance in 2020”.
“Depending on how the situation develops, there is the potential for any associated economic slowdown to impact our expected credit losses in Hong Kong and mainland China.”
The HSBC statement also addressed Brexit, saying that: “Now that the UK has officially left the EU, negotiations can begin on their future relationship.
“This has provided some certainty, but no trade negotiation is ever straightforward. It is essential that the eventual agreement protects and fosters the many benefits that financial services provide to both the UK and the EU.”
It added that as well as remaining close to Europe, the UK must also strengthen its links with other key partners, including the US, China and south-east Asia.
Mr Quinn said he and his team had begun implementing a plan to “increase returns for investors, create the capacity for future investment, and build a platform for sustainable growth”.
The restructure involves “consolidating” of some parts of the business and “reorganising the global functions and head office”.
In August the company announced 4,700 job cuts from its then workforce of 238,000.