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HSBC's departing boss Stuart Gulliver doubles profits but misses City expectations

HSBC chief executive Stuart Gulliver is handing over the reins to John Flint tomorrow - REUTERS/Bobby Yip
HSBC chief executive Stuart Gulliver is handing over the reins to John Flint tomorrow - REUTERS/Bobby Yip

Outgoing HSBC chief Stuart Gulliver has more than doubled its profits and returned the bank to revenue growth, but fell short of analyst expectations for improved performance.

Mr Gulliver - who hands over the reins at Europe's largest bank by market capitalisation to company veteran John Flint tomorrow - said his 'Pivot to Asia' strategy was delivering.

HSBC grew revenues for the first time in six years, posting turnover up 5pc to $51.5bn (£36.9bn) in the year to Dec. 

Pre-tax profits more than doubled to $17.2bn, although the previous year's number was skewed by writedowns, including the cost of exiting Brazil. With one-off costs stripped out, adjusted pre-tax profits were up 11pc to $21bn.

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However both the revenue and profit figures fell short of analyst forecasts, causing HSBC's share price to fall more than 1.5pc in afternoon trading in Hong Kong.

“HSBC is simpler, stronger, and more secure than it was in 2011,” Mr Gulliver said. “It has been my great privilege to lead HSBC for the last seven years, and in handing over to John I am confident the organisation is in great hands.”

The lender committed to paying an annual dividend of $0.51 for 2017, flat on the prior year. It did not commit to a further share buyback, saying it would only do so "as and when appropriate".

HSBC's Hong Kong office - Credit: REUTERS/Bobby Yip/File Photo
HSBC's 'Pivot to Asia' strategy has delivered a return to revenue growth Credit: REUTERS/Bobby Yip/File Photo

HSBC said it planned to raise up to $7bn towards its capital buffer in the first half of this year. Its core capital ratio, known as common equity tier one - an important indicator of banks' strength - increased to 14.5pc in 2017, up from 13.6pc.

The bank's return on equity was 5.9pc last year, well below its ultimate target of 10pc.

However Mr Gulliver said the bank had exceeded several targets he had set, including delivering more than $6bn of cost savings.

HSBC is coming out of a period of extensive restructuring, having exited more than half the countries where it had branches and made more than 87,000 job cuts.

HSBC received a boost in December when US regulators dropped a five-year deferred prosecution agreement (DPA) - which the authorities had described as a 'sword of Damocles' hanging over the bank - for its role in helping drug cartels launder money in Mexico and for contravening sanctions to do business with Iran.

The DPA had carried with it the threat that HSBC could have its US banking licences ripped up if it failed to clean up its act.

Mark Tucker joined the bank as chairman last year from Asian insurer AIA, the first outsider to join HSBC’s top team in its 153-year history.