HSBC has reported pre-tax profit of $17.2bn for 2017, compared with $7.1bn the year before but below the $19.7bn expected by analysts.
However, those estimates did not all take into account the tax writedown, triggered by cuts in the US corporate tax rate which meant banks had to book losses on deferred tax assets they built up during loss-making times.
HSBC revealed in its earnings statement that its 2017 financial results included a charge of $1.3bn relating to the “remeasurement of US deferred tax balances” to reflect the reduction in the US federal tax rate to 21% in 2018.
The bank’s reported revenues rose to $51.4bn from $48bn in 2016 and HSBC’s common-equity tier 1 ratio, a key measure of financial strength, was 14.5% in 2017, compared to 13.6% last year and 11.9% in 2015.
HSBC’s departing chief executive Stuart Gulliver, also announced plans to further bolster the bank’s capital base by raising up to $7bn in the first half of 2018.
The global banking group said it was planning additional tier 1 capital issuance of between $5bn and $7bn during the first half of 2018, and that it would undertake share buybacks “as and when appropriate”.
“In 2017, we returned a total of $3bn to shareholders through share buybacks and paid more in dividends than any other European or American bank,” Gulliver stressed in his statement to the stock market.
Growth in Asia
Asia proved the key driver of growth for the bank. Across the year, HSBC said its pre-tax profits from Asia rose by 89.3% from a year earlier to $15.3bn – this represented the bulk of its global profits in 2017.
By contrast, a loss of $1.9bn was recorded in Europe. HSBC has made no secret of its increased focus on Asia, actively looking to reduce exposure to what it sees and non-core business areas.