HONG KONG/LONDON (Feb 20): Stuart Gulliver’s seven-year reign as HSBC Holdings Plc’s chief executive officer ended with a rare failure to live up to analysts’ earnings estimates as lending margins narrowed and the bank booked loan charges related to two clients.
Adjusted fourth-quarter pretax profit of US$3.6 billion ($4.7 billion) missed the lowest estimate among analysts surveyed by Bloomberg. HSBC on Tuesday highlighted an US$188 million increase in loan impairment charges for the period, “mainly driven” by two corporate borrowers.
It was a rare miss for investors who had gotten used to Gulliver beating profit estimates, at least in the latter part of his tenure. The outgoing CEO delivered higher-than-forecast adjusted net income in six of the previous seven quarters, according to data compiled by Bloomberg. HSBC shares were down 2.2% in afternoon Hong Kong trading after the results announcement.
It was Gulliver’s last set of results before handing the reins to John Flint, an HSBC veteran who needs to maintain momentum as the bank tries to put years of restructuring and scandal behind it. Gulliver spent much of his tenure shrinking the lender’s far-flung global network, exiting almost 100 businesses and 18 countries.
“As I prepare to pass on the stewardship of HSBC to my successor, I am proud of our achievements,” Gulliver said in a statement. “After the most extensive transformation programme in HSBC’s 153-year history, HSBC is simpler, stronger and more secure than it was in 2011, and better able to connect customers to opportunities in the world’s fastest growing regions.”
The banks’s net interest margin in the fourth quarter fell from a year earlier. HSBC attributed the decrease to lower yields on customer lending and margin compression in Europe and Asia.