HSBC Holdings Plc (HBC: Quote,HSBA.L) on Monday said it recorded a 15 percent increase in pre-tax profit for fiscal 2011, while it sees a more moderate growth in fiscal 2012. The company expects the dynamic markets of Asia, Latin America and the Middle East to help push its 2012 results.
Noting that HSBC had good results in January, Chief Executive Stuart Gulliver stated that the company anticipates macroeconomic, regulatory and political uncertainties to persist, and challenge 2012 and beyond. Further, it expects mainland China to achieve a soft landing.
For fiscal 2011, pre-tax profit grew 15 percent to $21.87 billion from $19.04 billion a year ago. The British banking giant's fiscal 2011 profit was benefited by a $3.9 billion favorable fair value movements on own debt, compared to prior year's negative movement.
Underlying profit before tax, which excluded certain items, fell to $17.70 billion from $18.93 billion last year. This was due to 10% increase in costs reflecting higher staff costs, largely in faster-growing markets, and restructuring costs. These were partly offset by a significant improvement in loan impairment charges and other credit risk provisions, the company noted.
Among HSBC's subsidiaries, HK & Shanghai Banking Corp Ltd's pre-tax profit climbed 17% and Hang Seng Bank's profit grew 11%.
In the year, Commercial Banking as well as Retail Banking and Wealth Management segments posted strong earnings growth driven by the results in faster-growing regions of Rest of Asia-Pacific, Hong Kong and Latin America.
The company achieved strong revenue growth in key markets including mainland China, India, Malaysia, Brazil and Argentina.
In Global Banking and Markets, revenues grew strongly in over half of business lines but were more than offset by the eurozone sovereign debt concerns which dominated European market sentiment. Global Private Banking segment also performed poorly.
On an underlying basis, total revenues were broadly in line with 2010, despite the turmoil in the eurozone and its adverse effect on Credit and Rates revenue, the company said.
For the year, HSBC's net interest income grew 3 percent to $40.66 billion and Net operating income before loan impairment charges and other credit risk provisions increased 6 percent to $72.28 billion.
Further, the company said its Board declared a fourth interim dividend of $0.14 per share, taking total dividends for 2011 to $0.41 per share, an increase of 14 percent. The Board would also pay quarterly dividends during 2012 at the rate of $0.09 per share.
Looking ahead, HSBC added that it is focused on 2013 target cost efficiency ratio between 48 percent-52 percent, in comparison to fiscal 2011 ratio of 57.5 percent.
HSBC is currently trading at 562.70 pence in London, down 12.20 pence or 2.12 percent.
by RTT Staff Writer
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