HSBC profits hit by China slowdown

HSBC has reported a lower-than-expected 15.9% rise in pre-tax profits for 2018, partly because of an economic slowdown in China and Hong Kong.

Europe’s largest bank made $19.9bn (£15.4bn) before tax last year, compared with $17.2bn in 2017.

Reported revenue was $53.8bn, a rise of 5% from the previous year.

HSBC makes three-quarters of its profits in Asia and China’s trade war with the US was one reason for problems with its economy near the end of 2018.

Group chairman Mark E Tucker said that the bank was “in a strong position”.

He added: “Despite a challenging external environment in the fourth quarter, all of our global businesses delivered increased profits and the group achieved a higher return on tangible equity in 2018.”

Last June, new group chief executive John Flint set out eight targets for the bank to achieve, including accelerated growth from Asia and its international network and a growth in its UK customer base.

He said the latest results were good and showed that progress had been made towards achieving these goals.

Mr Flint added that the bank was ready for Britain’s departure from the European Union next month, and said that its operations in France “gives us a major advantage in this regard”.

Eoin Murray, head of investment at Hermes fund managers, told BBC Radio 4’s Today Programme that he expected a “modestly negative” reaction to HSBC’s results.

“If you look at the bigger picture, HSBC is still an incredibly profitable institution. It is pivoting towards Asia… and that strategy appears to be successful”.

Meanwhile, HSBC is planning to increase the salaries of its directors by 3.3% this year – which the bank says is in line with with the average for its UK employees. It is the first salary rise for executive directors since 2011.

The bank is also asking shareholders to approve a new pay policy for its directors at April’s annual general meeting – which will be in Birmingham this year.