HSBC profits dive on political storms
Print Edition
HSBC profits plunged last year on huge writedowns and restructuring charges, the banking titan said yesterday, warning of uncertainty over Brexit and Donald Trump’s economic policies.
The bank with a focus on Asia said net profit tumbled to US$1.29 billion in 2016, down 90 percent year on year.
Profit before tax was US$7.1 billion, down 62 percent, after HSBC slashed the value of its private banking activity in Europe by US$3.2 billion over an acquisition made in 1999.
HSBC was hit by restructuring costs of US$3.1 billion following its notice in 2015 to cut 50,000 jobs and exit non-core markets. The bank also took a charge of US$1.8 billion following a change to its debt value.
In the regulatory statement, HSBC Chairman Douglas Flint said the political sea-changes that had rocked the world in 2016 had contributed to “volatile financial market conditions.”
Looking ahead, he highlighted “the threat of populism impacting policy choices in upcoming European elections, possible protectionist measures from the new US administration impacting global trade ... uncertainties facing the UK and the EU as they enter Brexit negotiations.”
Flint said the bank was looking for worldwide agreement on financial rules to avoid possible “fragmentation in the global regulatory architecture as the new US administration reconsiders its participation in international regulatory forums.”
Trump wants to dismantle some of the restrictions on banks put in place after the 2008 financial crisis, rules his Republican Party says have hampered Wall Street’s ability to make money.
Observers worry that any such move to loosen controls could leave European and Asian-based banks at a disadvantage compared to their US counterparts.
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