HONG KONG (AP) — London-based bank HSBC reported Tuesday that its annual profit slumped following a year it said would be remembered for “unexpected economic and political events” and warned of risks in 2017 to the global economy’s continuing recovery.
Europe’s biggest bank said net profit for 2016 tumbled 82 percent to $2.5 billion from $13.5 billion a year ago as annual revenue fell 18.5 percent to $48 billion.
In the most recent quarter, HSBC’s net loss widened to $4.2 billion from $1.3 billion in the same period the previous year.
In a statement, Chairman Douglas Flint said uncertainties from last year’s events “temporarily influenced investment activity and contributed to volatile financial market conditions,” though he added that HSBC’s performance was satisfactory. While he didn’t mention any specifics, it was likely a reference to, among other things, Britain’s unexpected vote to leave the European Union and Donald Trump’s U.S. election victory.
Flint said the bank recently raised its forecast for global economic growth, based on the increasing chances that the U.S. will make changes to fiscal policy to boost the economy as well as growth in emerging markets.
“Risks to this central scenario, however, remain high,” Flint said, including the effect of rising populism on policy in upcoming European elections, the threat of global trade protection measures from Trump’s administration and uncertainty over Britain’s negotiations to leave the European Union.
Flint said the bank has all the “licenses and infrastructure” it needs to continue working with customers once Britain does leave the EU. He also repeated previous projections from the bank that 1,000 staff might need to move from London to Paris over the next two years, depending on how exit negotiations go.
HSBC’s profits were partly hit by its decision to write off the remaining $3.2 billion in its European private banking business, stemming from its 1999 purchase of Safra Republic Holdings. The write-off accounted for part of the $6.8 billion pre-tax loss at its European business in 2016.
Business at its Asian unit, meanwhile, remained fairly steady, with pretax profit dipping 12.5 percent to $13.8 billion pre-tax, mainly because of the effect of one-time items. HSBC is in the middle of trimming back its global operations as it carries out a sweeping reorganization to focus on faster-growing Asia, where it expects the region’s growing affluence to drive profits.
The bank said it would buy back an additional $1 billion worth of shares in the first half of the year, following a $2.5 billion buyback last year.
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