HSBC earns profit of $17.2bn in 2017

HSBC said its pivot to Asia has been paying off

HSBC Holdings' pre-tax profit for 2017 has more than doubled to $17.2bn (£12.3bn), due largely to the absence of hefty restructuring costs, but the figure still lagged behind expectations as the bank took a writedown to take in United States tax changes.

Despite the positive news on the bank's Asia-wide business, the firm's shares dropped as its overall results fell short of expectations.

Gulliver, who is leaving the bank after more than 37 years' service including seven years at the helm, earned an annual bonus of 2.1 million pounds in 2017 on top of 3.9 million pounds in salary, allowances and benefits.

Given HSBC's healthy capital position, its common equity tier one (CET1) ratio has nearly risen by an entire percentage point in a year to 14.5% from 13.6% this may seem stingy.

HSBC kept its annual dividend at 51 cents last year, unchanged from the year before.

HSBC has posted a jump in annual pretax profit for the past year, but failed to meet analyst expectations as it unveiled plans to raise billions of pounds worth of cash to strengthen its capital base.

Chairman Mark Tucker said HSBC forecasts "reasonable growth" for the world's major economies in 2018, though he warned about rising worldwide tensions and the threat of protectionism.

But investors should keep an eye on the US, where HSBC has excess capital and an opportunity to buy very low-tax earnings growth because it has a vast stock of potential tax discounts.




"Fears of a hard landing in China have receded, and markets across Asia look set for a strong year", said chairman Mark Tucker. The final gross dividend will be 12.4 cent per share (8.1 cent per share net of tax).

Looking ahead, it maintains a "cautious outlook" on the credit environment and continues to focus on maintaining high level of asset quality, Hang Seng Bank said in a separate statement.

He noted that rising worldwide tensions and the threat of protectionism were among the risks that have the potential to disrupt economic activity but believes HSBC is well equipped to withstand any knocks thanks to stable revenue generation and capital strength.

HSBC's dividend yield remains at 4.8%, whereas peer Lloyds Banking (LLOY) yields around 6% based on forecasts for 2018.

Laith Khalaf, senior analyst at Hargreaves Lansdown, warned that HSBC's focus on Asia comes with risks attached.

"No CEO likes to see their shares trade lower on results day, let alone your last day in the office", he said.

HSBC Holdings Plc kick-started the United Kingdom bank earnings season with the final set of results for Chief Executive Officer Stuart Gulliver as John Flint assumes the role.

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