THE
WALL STREET JOURNAL.
Markets
HSBC to Buy Back More Shares After Net Loss Widens
Stock price falls sharply
|
HSBC said Tuesday it would buy back as much as $1 billion in
shares, adding to $2.5 billion bought back last year, and left
the door open for further purchases.
PHOTO: REUTERS |
By
Margot Patrick
Updated Feb. 21, 2017 7:47
a.m. ET
HSBC Holdings PLC shares fell
6% after it reported unexpectedly weak fourth-quarter results and said
shifting attitudes toward globalization could affect its business.
Executives at the bank
said a changed U.S. stance on global trade, the rise of populism in
Europe and Britain’s planned exit from the European Union have added
uncertainty in HSBC’s key markets. They gave a mixed outlook for 2017,
saying rising rates will help it in the medium term but that revenues
in the U.K. and emerging markets are being dented by a strong dollar.
The stock has gained
around 50% in a year, mainly on hopes that future U.S. interest-rate
rises would lift margins and revenue. HSBC’s fourth-quarter earnings
fell short of analyst expectations because of a series of one-off
items, but also reflected margin pressures in some businesses. Its net
loss widened to $4.23 billion in the three months to end-December from
$1.33 billion in 2015’s fourth quarter. Full-year net profit sank to
$2.48 billion from $13.52 billion.
Chief Executive Stuart
Gulliver said political change could shift global trade into regional
blocs, while predicting London will remain the “dominant financial
center” in the region even after some business relocates to the EU
because of Brexit. HSBC repeated its plans Tuesday to move around
1,000 jobs to Paris in the next two years.
There was some good news
for investors. HSBC said it would buy back as much as $1 billion in
shares, adding to $2.5 billion bought back last year, and left the
door open for further buybacks as capital is freed up at its U.S.
business this year. The bank is among the most strongly capitalized in
Europe.
HSBC has undergone
a major restructuring since 2011 under the leadership of Mr. Gulliver
and Mr. Flint,
exiting from most of Latin America and placing
more focus on Asia. Mr. Flint is set to step down after a
replacement is announced this year, and then the new chairman will
seek a successor to Mr. Gulliver. Mr. Gulliver said Tuesday that Mr.
Flint might not depart until 2018.
HSBC’s struggles to get on
top of its financial crime fighting systems continued. It spent $1.6
billion on implementing “global standards”--anti-money laundering
systems and controls used across the bank—but the monitor overseeing
its compliance with a 2012 U.S. legal settlement found continuing
deficiencies.
HSBC agreed to pay $1.9
billion in 2012 to settle allegations by the U.S. Justice Department
that it failed to catch money laundering and violated sanctions. The
bank admitted to the failings and entered a five-year deferred
prosecution agreement.
Mr. Gulliver said the
monitor identified some potential failings in its U.K.
anti-money-laundering controls at the end of 2016, causing the U.K.
financial regulator to order a fresh review.
--Joanne Chiu contributed
to this article.
Write to
Margot Patrick at
margot.patrick@wsj.com
