HSBC plc (HSBC) - Get HSBC Holdings PLC Sponsored ADR Report share fell sharply in London Monday after Europe's biggest bank posted much lower-than-expected full year earnings and increased its share buyback program Tuesday after taking a multi-billion dollar writedown on its European private banking assets.
HSBC said full year profits before tax came in at $7.1 billion, down 62% from 2015 and well shy of the $14.4 billion forecast by analysts. Profits on an adjusted basis came in at $19.3 billion while revenues for the full year were $50.2 billion, the bank said. HSBC said the bottom line was hit by a $3.2 billion goodwill writedown on its private banking division in Europe, which was linked to the purchase of Safra Republic Holdings in 1999.
HSBC shares fell more than 5.5% in early London trading to change hands at 674.4 pence each, trimming the three month gain to just over 7%.
"We have considered it appropriate to write off the remaining goodwill in the European private banking business," said CEO Stuart Gulliver. "The restructuring of Global Private Banking is now largely complete, and although Global Private Banking is now much smaller than it was three years ago, it is deliberately positioned for sustainable growth with a focus on serving the personal wealth management needs of the leadership and owners of the Group's corporate clients."
HSBC's addition of $1 billion to its share buyback program takes the scheme to just over $3.5 billion.
"We are investing over $2 billion in digital transformation initiatives to improve our offer to customers, and are instigating a further $1 billion buy-back programme reflecting the strength and flexibility of our balance sheet," Gulliver said.