HSBC Has Quarterly Loss on Lending Income, Bad-Loan Charges – Bloomberg

HSBC Holdings Plc, Europe's largest bank, posted a fourth-quarter loss as income from lending fell, loan-impairment charges increased and it booked fair-value losses on its debt.

The lender's shares erased earlier gains in Hong Kong on Monday after the bank reported in an exchange statement a pretax loss of $ 858 million, compared with a profit of $ 1.73 billion a year earlier. Analysts surveyed by Bloomberg on average forecast a $ 1.95 billion profit for the quarter. 

Breaking Down HSBC Earnings

HSBC Chief Executive Officer Stuart Gulliver, 56, has been accelerating plans to scale back the lender's vast global footprint, seeking to boost profitability and reverse a share slump this year. In June, the CEO unveiled a new strategy to boost investment in Asia, exit unprofitable countries and cut as many as 25,000 jobs to help save as much as $ 5 billion by the end of 2017.

Shares in HSBC traded 0.3 percent lower at 1:30 p.m. in Hong Kong after advancing as much as 2 percent earlier in the day.

Bad Loans

Revenue in the fourth quarter sank by 18 percent to $ 11.8 billion as net interest income fell to $ 8.1 billion. Revenue was also hurt by expenses related to losses on hedging, according to HSBC spokesman Gareth Hewett. Impairments on bad loans and credit-risk provisions increased by 32 percent to $ 1.64 billion. That took full-year charges to $ 3.7 billion, exceeding the consensus analyst estimate of $ 3 billion.

The increase in bad-loan charges in HSBC's wholesale banking division was driven by the oil and gas sector, where companies have been battered by the commodities slump. Wholesale banking accounted for almost $ 1 billion of loan impairment charges in the quarter, according to an HSBC presentation that accompanied the earnings.

Operating costs in the fourth quarter amounted to $ 11.5 billion and the bank declared a dividend of 21 cents for the period. Adjusted pretax profit fell 34 percent to $ 1.9 billion.

Earlier this month, the board decided to keep the bank's headquarters in London, favoring the British capital over its ancestral home of Hong Kong, after obtaining concessions from the U.K. government on regulation and taxes.

HSBC also said it will retain and restructure its unprofitable Turkish unit. The bank had received a number of offers for the business since June, none of which "were deemed to be in the best interests of our shareholders," Gulliver said in the statement.