 "HSBC 2015 profit nearly flat, sees bumpier environment ahead")
HSBC said it saw a 'bumpier' financial environment ahead after reporting a lower-than-expected 2015 pre-tax profit against a bleak backdrop of slowing growth in China and tumbling commodities prices.
HSBC said profit before tax was $18.87 billion for 2015 against $18.7 billion the year before, well below the average analysts' estimate of $21.8 billion, according to Thomson Reuters data.
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.
But Chairman Douglas Flint added the economic slowdown there was making the environment more challenging.
"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," Flint said.
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HSBC shares in Hong Kong erased earlier gains after the earnings statement. By 0516 GMT they were down 0.2%, underperforming a 0.8% rise in the broad Hang Seng Index.
"The share reaction was somewhat muted as the market had got ahead of consensus and priced in a lot of negative because of China," said Jimmy Weng, portfolio manager and founder of Hong Kong-based fund boutique Genesis Capital Investment.
Last year, Asia represented 83.5% of global pre-tax profit for HSBC, a larger portion than a year earlier and a sign that the bank's future growth is tied to the region's.
HSBC, which just over a week ago decided not to move its headquarters to Hong Kong, proposed to hike its dividend to $0.51 per ordinary share against $0.50 a year earlier.
This is a relief to investors who had worried the lender's more constrained capital position would cause management to abandon the goal of progressive dividend growth.
In 2014, HSBC recorded a bill of $3.7 billion for provisions, fines, and settlements with regulators.
The bank, which is reining in costs as a result of its higher regulatory burden, said in its annual report Chief Executive Stuart Gulliver's total pay had fallen to 7.34 million pounds ($10.48 million) from 7.62 million pounds a year earlier.