HSBC pre-tax profit slides but hails 'good result'

HSBC said Thursday that pre-tax profit fell 19 percent in the first quarter but the bank's chief described them as "a good set of results" after a turbulent 2016. The Asia-focused giant has been on a recovery drive over the past two years to streamline the business and slash costs, and has laid off tens of thousands of staff. London-based HSBC blamed the drop in reported profit to US$4.96 billion on a change in accounting the fair value of its debt, while the results from a year ago had included proceeds from the sale of its Brazil business. The lender also posted a 19.5 percent fall in year-on-year net profit to $3.13 billion from $3.89 billion. However, adjusted pre-tax profit excluding one-time items rose to $5.94 billion from $5.3 billion a year earlier. Analysts had forecast $5.3 billion in a survey by Bloomberg News. "This is a good set of results," chief executive Stuart Gulliver said in a results statement. He added that the adjusted pre-tax figure was boosted by a $1 billion share buy-back and cost-cutting. In reaction, the group's London-listed shares rallied 3.87 percent to 670.20 pence around midday on the capital's rising FTSE 100 index. "The bank's Asian focus has proved to be a key driver of returns so far in 2017," noted analyst Laith Khalaf at stockbroker Hargreaves Lansdown. - Brexit job moves - HSBC repeated its long-standing plans to relocate 1,000 staff from London to Paris over the next two years as a result of Britain's looming exit from the European Union. However, Gulliver stressed Thursday in a conference call that 1,000 jobs was a "worst case" scenario. The group currently employs 42,600 staff in Britain. Analyst Jackson Wong said he thought the results were positive overall. "They cleaned up a lot of bad things in the last quarter of last year so this quarter, everything looks pretty decent, even the cost-cutting is on track," said Wong of Huarong International Securities. The bank in 2015 announced a radical overhaul to cut 50,000 jobs and exit non-core and unprofitable businesses and focus more on Asia. But profits were dealt a hammer blow last year, with executives attributing the decline to protectionist fears under US President Donald Trump -- and uncertainties arising from Brexit. - Overhaul on track - Gulliver added that 2017 would see the completion of strategic measures announced in 2015, including the removal of low-return risky assets. The results were the first since the banking giant announced the appointment of a new chairman in March as part of a management overhaul that will also see it choose a new chief executive, following a massive drop in 2016 profits. British businessman Mark Tucker, currently group chief executive and president of insurance group AIA, will take over from Douglas Flint in October. He will lead the hunt for a new CEO to replace Gulliver, who is set to retire in 2018. Gulliver and Flint were grilled by British lawmakers in 2015 and apologised for "unacceptable" failings at HSBC's Swiss division following allegations the unit helped rich clients hide billions of dollars from the taxman. HSBC was one of six major US and European banks that were fined a total of $4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign exchange market. It was also fined $1.92 billion by US prosecutors in 2012 to settle allegations that it failed to enforce anti-money laundering rules exposing it to exploitation by drug cartels and terrorist organisations.