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Pretax profit disappointment signals 'bumpier' times lie ahead for HSBC

HSBC, one of the largest banking and financial services organisations in the world, has today reported a lower than expected pretax profit return for 2015.

Revealing that the figure was $18.87 billion for 2015 against $18.7 billion the year before, slow growth in China and tumbling commodity prices have resulted in the bank’s figure coming in at well below the average analysts’ estimate of $21.8 billion.

On a quarterly basis, Europe’s biggest bank reported a surprise pre-tax loss of $858 million, the result of value adjustments on derivatives, legal costs and the disposal of its business in Brazil. The result was also hit by restructuring costs the bank is undertaking to achieve $4.5 billion to $5 billion in cost savings.

In its earnings statement, HSBC said it was going to stick to delivering on a June strategic plan centred around further expanding into China, and in particular the densely-populated Pearl River Delta region.

Chairman Douglas Flint added the economic slowdown there was making the environment more challenging.

He said: “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.”

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