HSBC stock set to fall in Hong Kong as Q4 profit disappoints

PUBLISHED : Monday, 24 February, 2014, 9:32pm
UPDATED : Tuesday, 25 February, 2014, 1:35am

Asian investors look set to sell HSBC stock when the market opens in Hong Kong today after Europe's biggest bank saw its profit slip in the fourth quarter of last year as provisions and levy commitments rose and revenue remained flat.

HSBC's London-listed stock fell as much as 5.68 per cent following the earnings report. The shares have fallen 0.29 per cent in Hong Kong this year and fell 0.53 per cent yesterday before the results announcement.

Analysts said the lack of a growth driver for its revenue remained HSBC's main challenge. The bank reported a pre-tax profit of US$22.56 billion last year, up 9 per cent from 2012 but short of the US$24.5 billion market consensus forecast.

Its pre-tax profit for the fourth quarter was about 12 per cent lower than in the third quarter.

Chief executive Stuart Gulliver took home £8.03 million (HK$104 million) in salary and bonuses last year, compared with £7.5 million in 2012, despite the group's disappointing performance.

HSBC became the first lender to say it would seek shareholder approval to lift the new European Union bonus cap to 200 per cent of its top executives' salary from 100 per cent.

The bank closed or disposed of 20 non-core investments last year, making a total of 63 disposals or closures and 41,000 job cuts since Gulliver became chief executive in 2011. The bank said that had saved it US$4.9 billion and would release about US$95 billion in risk-weighted assets for further growth.

"We have no plan to list our UK retail banking and wealth management business or any part of the UK bank at the moment," Gulliver said in a conference call yesterday, adding that the bank had no capital-adequacy problems. "Today the group is leaner and simpler than in 2011, with strong potential for growth," he said.

Finance director Iain Mackay said the bank was targeting an additional US$2 billion to US$3 billion in cost savings over the next three years.

HSBC's bank levy, payable to the British government, increased to US$904 million last year, US$321 million more than in 2012.

Gulliver said growth on the mainland and in Hong Kong was "reasonable" and that he expected a soft landing in the world's second-largest economy.

Some 70.25 per cent of profit before tax came from Hong Kong and the Asia-Pacific region.