HSBC’s full-year profit for 2018 misses expectations

For 2018, profit before tax came in at US$19.9 billion, an increase of 15.9% compared to US$17.2 billion a year ago. The profit however, was lower than analysts’ estimates of a US$22.0 billion gain.

HSBC Holdings Source: Bloomberg

HSBC Holdings reported a weaker-than-expected profit for 2018 due to higher fees and the impact of the global stock rout which affected its trading businesses. The bank said it is expecting obstacles such as a weaker economic outlook for China and Britain to pose as challenges for its business this year.

For 2018, profit before tax came in at US$19.9 billion, an increase of 15.9% compared to US$17.2 billion a year ago. The profit however, was lower than analysts’ estimates of a US$22.0 billion gain.

Revenue came in at US$53.8 billion, a 4.5% increase compared to a year ago. Analysts had expected revenue for the year to be up by 6.3%.

Net interest margin was at 1.66%, higher than the 1.63% recorded a year ago.

Earnings Per Share (EPS) for 2018 was US$0.63, an increase compared with US$0.48 reported a year ago.

HSBC said it would pay a full-year dividend of US$0.51 per share, a sum which is in line with analysts’ expectations. The bank said it is confident in maintaining its dividend at the existing level.

The bank’s share price fell by 2.3% by the end of the trading day on Tuesday, down HK$1.55, to HK$66.15.

HSBC remains alert to weak global economic growth, global trade tensions

China’s economic slowdown and trade war with the United States poses a challenge to HSBC’s strategy to focus on Asia, while headwinds from Britain due to the country’s Brexit woes are also affecting the bank’s growth.

The bank's profits in Asia rose by 16.0% to US$17.8 billion for last year, which accounted for 89.0% of the group profit. But economic uncertainty in the United Kingdom (UK) due to Brexit is causing a slowdown to the bank's business as investors are postponing their investment decisions.

HSBC’s chief executive John Flint said the bank remains alert to the downside risks of the current economic environment, global trade tensions and the future path of interest rates.

‘Despite more challenging market conditions at the end of the year and a weaker global economic outlook, we are committed to the targets we announced in June,’ Mr Flint said.


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