HSBC profits surge as CEO departs

Profits at HSBC surged during 2017, in part thanks to a strong Asian performance, the global banking giant said Tuesday as it looks to the future without long-serving chief executive Stuart Gulliver. Net profit ballooned to $9.7 billion (7.9 billion euros) last year, from $1.3 billion in 2016 when the Asia-focused bank was hit by huge restructuring charges and writedowns.
London-headquartered HSBC said that pre-tax profits more than doubled to $17.2 billion after it streamlined business and slashed costs. Gulliver, who stepped down Tuesday after seven years at the helm, decided in 2015 to move HSBC out of non-core markets and axe 50,000 jobs.
Handing over the reins to his colleague John Flint, Gulliver said the bank was "simpler, stronger, and more secure" than when he started as chief executive. But chairman Mark Tucker warned that despite being optimistic about the global economy in 2018, the bank was wary about possible disruption from rising international tensions and the threat of protectionism. Shares in HSBC were down 3.5 percent at 733.70 pence in early afternoon deals on London's benchmark FTSE 100 index, which was lower overall.
Analysts said that although HSBC had bounced back after restructuring and a string of financial scandals, it had missed some profit forecasts for 2017. "Rising interest rates and a thriving global economy have helped HSBC to post a healthy increase in profits in 2017," noted Laith Khalaf, analyst at stockbrokers Hargreaves Lansdown.
HSBC's strategy of expanding business in the Pearl River Delta, home to Hong Kong and Guangzhou, has boosted performance, with Asia business driving more than 75 percent of reported and adjusted profit in 2017, the bank said. And while the lender's margins have improved as central banks raise borrowing costs, there are worries that faster-than-expected increases to US interest rates this year could impact HSBC.
In December, US authorities lifted the threat of prosecution against HSBC, five years after it admitted to widespread money laundering and sanctions violations. In a landmark case, the bank agreed to pay $1.9 billion in fines in 2012, after admitting it knowingly moved hundreds of millions of dollars for Mexican drug cartels and illegally served clients in Iran, Myanmar, Libya, Sudan and Cuba in violation of US sanctions.