- Category: Economic
- Published Monday, February 22, 2016
- CTV News
HONG KONG - HSBC warned of a "bumpier" global financial outlook thanks to China's slowing economy, as it reported Monday that profit dipped slightly last year.
Europe's biggest bank posted a net profit of $13.5 billion for 2015, down 1.2 per cent from the year before and below analysts' forecasts.
The bank also unexpectedly announced a $1.3 billion loss for the final quarter, compared with a $511 million profit in the same period the previous year.
Chairman Douglas Flint said the results were "broadly satisfactory." He said in a statement that last year was marked by "seismic shifts in global economic conditions," notably sharp falls in prices for oil and other commodities, partly stemming from slowing growth in China.
The London-based bank has been steadily trimming back its global operations as part of a sweeping reorganization announced last June in order to focus on Asia, where it expects the region's growing affluence to drive profits. Asia accounted for 83.5 per cent of HSBC's pre-tax profits last year. It's slashing thousands of jobs and selling off businesses in countries like Brazil while expanding in China, particularly the wealthy Pearl River Delta manufacturing region in the country's south.
HSBC said that cost cutting measures were already having an impact and it's now a "leaner business" than it was half a year ago.
However, Flint said challenges remain as growth ebbs in China, where the economy grew last year at its slowest rate in a quarter century.
"China's slower economic growth will undoubtedly contribute to a bumpier financial environment, but it is still expected to be the largest contributor to global growth as its economy transitions to higher added value manufacturing and services and becomes more consumer driven," he said.
Growth in China's economy, the world's second biggest, dipped to 6.9 per cent last year as policymakers sought to shift away from growth based mainly on export-led manufacturing and investment toward greater reliance on consumer demand. Officials are forecasting growth of between 6.5-7 per cent this year.
Despite its focus on Asia, last month HSBC decided to keep its headquarters in London rather than moving it to Hong Kong, ending a 10-month review prompted by new U.K. regulatory and tax changes. The bank said keeping its base in London gave it the "best of both worlds." HSBC has a sizeable presence in Hong Kong, where it was founded to finance trade between China and Europe more than a century ago, when the city was still a British colony.
CEO Stuart Gulliver said HSBC gave up on plans to sell its Turkey business because it didn't get a good enough offer. It will restructure it instead.