HSBC FY19 Profit Down, Revenues Up; To Suspend Share Buy-backs For 2020 And 2021

Asia-focused lender HSBC Holdings Plc (HSBC,HSBA.L) reported Tuesday that its fiscal 2019 profit attributable to the ordinary shareholders of the parent plunged 53 percent to $5.97 billion from last year’s $12.61 billion. Earnings per share fell to $0.30 from $0.63 a year ago.

The latest results were impacted by a goodwill impairment of $7.3 billion.

Reported profit before tax was down 33 percent to $13.3 billion.

Adjusted profit before tax was $22.21 billion, compared to $21.18 billion last year.

Revenue for the year went up 4 percent $56.10 billion from $53.78 billion a year ago. Adjusted revenue grew 5.9 percent to $55.4 billion.

The company reported good revenue growth in Retail Banking and Wealth Management, Global Private Banking and CMB, together with improved cost control.

Looking ahead, the company targets a gross risk-weighted asset or RWA reduction of over $100 billion by the end of 2022, with these RWAs to be reinvested, resulting in broadly flat RWAs between 2019 and 2022.

The company projects a reduced adjusted cost base of $31 billion or below in 2022, underpinned by a new cost reduction plan of $4.5 billion; and a reported RoTE in the range of 10 percent to 12 percent in 2022.

To achieve its targets, the company expects to incur restructuring costs of around $6 billion and asset disposal costs of around $1.2 billion during the period to 2022, with the majority of restructuring costs incurred in 2020 and 2021.

Further, HSBC said it plans to suspend share buy-backs for 2020 and 2021, given the high level of restructuring expected to be undertaken over the next two years.

The company intends to return to neutralising scrip dividend issuance from 2022 onwards.

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