HSBC profits jump but fail to meet lofty expectations as CEO leaves after seven years

Profit dented by write-down stemming from cuts in the US corporate tax rate

The results mark the last under chief executive Stuart Gulliver (Getty)

HSBC has posted a jump in annual pretax profit for the last year, but failed to meet analyst expectations as it unveiled plans to raise billions of pounds worth of cash to strengthen its capital base.

The global bank on Tuesday reported profit before tax of $17.2bn (£12.3bn) for 2017, a significant jump from the $7.1bn chalked up a year earlier, but still clearly below the $19.7bn average estimate that analysts polled by Thomson Reuters had pencilled in.

The figure was dented by a $1.3bn writedown stemming from cuts in the US corporate tax rate. Those cuts meant that several banks had to book losses on deferred tax assets which they had built up during loss-making times.

HSBC said that it was now planning to raise $5bn to $7bn during the first half of this year, with the aim of strengthening a key measure of the health of its balance sheet. It also said that it would buy back shares “as and when appropriate”.

These results are the last with Stuart Gulliver as chief executive. Mr Gulliver oversaw a tumultuous seven-year period for the bank, defined by difficult trading conditions that resulted in swathes of job cuts and branch closures. Mr Gulliver will be replaced by John Flint, who has been with HSBC since 1989 and most recently headed up the bank’s retail banking and wealth unit.

Analysts have said that Mr Flint’s job of continuing to rebuild HSBC after a difficult period could be helped by rising interest rates following a period of historic lows. Those rising rates already enabled HSBC to grow revenues in its retail division by 9 per cent in 2017.

“These results and the achievements of the past couple of years give us a great platform to build on,” Mr Flint said, commenting on Tuesday’s results.

“I am working with the management team and the board to evolve our strategy and execute it at pace, and I will update shareholders on this work by our half-year results,” he added.

“The fundamentals of HSBC will remain the same as they always have – strong funding and liquidity, strong capital and a conservative approach to credit,” he said.

Outgoing chief executive Mr Gulliver echoed his successor’s optimism.

“These good results demonstrate the strength and potential of HSBC. All our global businesses grew adjusted profits and we concluded the transformation programme that we started in 2015,” he said.

“HSBC is simpler, stronger and more secure than it was in 2011,” he added. “It has been my great privilege to lead HSBC for the last seven years, and in handing over to John I am confident the organisation is in great hands.”

Additional reporting by Reuters