22nd February 2016
HSBC has reported that profits before tax at the group rose by a less than anticipated 1% in 2015 to reach $18.bn, (£13.2bn) as the China slowdown and cheaper oil prices hit progress.
Europe’s biggest bank, which derives the majority of its profits in Asia, said that the year had presented a “difficult market environment”.
For the final quarter of last year it endured a loss of $1.3bn (£937m) compared with £360m achieved during the same period in 2014.
On Monday, following the news, shares in the bank dipped almost 5%, or 20.25p, to 429.6p by 9:06am. Over the past 12 months the stock has plummeted by 25%.
Stuart Gulliver, group chief executive said: ”Targeted investment, prudent lending and our diversified, universal banking business model helped us achieve revenue growth in a difficult market environment, whilst also reducing risk-weighted assets.
“Strict cost management slowed cost growth and our cautious approach to credit helped keep loan impairment charges low. We made a good start in implementing the plans that we announced at our Investor Update in June. Delivering against these plans remains our primary focus.”
Commenting on the results, Graham Spooner, investment research analyst at The Share Centre said: “Income seekers in the banking sector have been hit hard in recent years.
“Investors interested in the sector should note that HSBC has remained a significant payer and although progress may continue to be slow in the face of many challenges, the shares could be a better option than other banks. HSBC is viewed as being more conservatively managed with a superior balance sheet and deposits.
“In the present climate we would recommend the shares as a ‘buy’ for medium risk income seekers. However, we would suggest that longer term investors build a holding over time, as there is no quick fix for the sector.”
Last week HSBC confirmed that it is to stay in the UK following a lengthy review of where best to locate its headquarters.
The board’s decision was unanimous, the bank said in a statement.
In the wake of tighter UK regulations, HSBC conducted a review into whether to move abroad, with Hong Kong, its other major centre, viewed as the most likely alternative destination.
HSBC has been based in Britain since 1993.