HSBC profits jump to $17.2bn on Asia growth

HSBC’s departing CEO Stuart Gulliver at the Paris Europlace international financial forum

Gulliver is stepping down after more than seven years at the helm of Europe's biggest bank by market value, which has been through a painful restructuring that has cost thousands of jobs.

"HSBC is comfortably the second largest dividend payer in the United Kingdom, but a long process of restructuring has meant nearly no growth in dividends for four years", commented Justin Cooper, CEO of Link Market Services, part of Link Asset Services.

This brings the total dividend for 2017 to $0.51, representing a total shareholder return of 24 percent for 2017.

HSBC reported profit before tax of $17.2 billion up $10.1 billion on 2016, which included a loss on the operations in Brazil the bank sold the same year.

Analysts cited the lack of a reliable growth engine due to inconsistent markets and the threat of United States interest rate hikes as problematic for the bank, with a lack of clarity on share buybacks weighing on the stock price.

Those estimates did not all take into account the tax writedown, triggered by cuts in the U.S. corporate tax rate that meant banks had to book losses on deferred tax assets built up during loss-making years.

The lender said it was planning additional tier 1 capital issuance of between US$5 billion and US$7 billion during the first half, and that it would undertake share buybacks "as and when appropriate".

HSBC's pre-tax profit for 2017 jumped 11 percent from the same period of 2016, fuelled by surging growth in Asia.

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Stuart Gulliver's final set of results at HSBC Holdings Plc weren't quite the swansong he'd hoped for as he hands the reins over to his long-term lieutenant, John Flint.

Those growth plans should be helped by a more favourable interest rate environment for the bank's deposit-heavy franchise than his predecessor enjoyed.

Adjusted revenue for 2017 was $51.5 billion, up 5 percent from the previous year.

The company said it delivered growth from worldwide network with a 6 percent increase in transaction banking product revenue and a 13 percent rise in revenue synergies between global businesses compared with 2016. "HSBC is simpler, stronger, and more secure than it was in 2011". The firm's loan impairment charges were about $188 million higher in the fourth quarter than a year earlier, "largely driven by two individual corporate exposures in Europe", it said in a filing.

The two companies responsible were Steinhoff International Holdings NV - the South African retailer engulfed in an accounting scandal and Carillion Plc, the United Kingdom construction company that imploded earlier early this year, a person familiar with the figures said, who asked not to be identified speaking about confidential data.

Flint said he would update investors with his thoughts on where to take the bank's strategy before it reports half-year results in June.

"We are doing a piece of work around the USA business at the moment, I don't want to prejudge any conclusions", Flint said.

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