HSBC Q3 pre-tax profit falls 18%, misses forecasts

The Sino-US trade war and Brexit uncertainties weighed on business sentiment in HSBC’S core markets of Asia and Britain. (AFP)
Updated 28 October 2019

HSBC Q3 pre-tax profit falls 18%, misses forecasts

  • Sino-US trade war and Brexit uncertainties weighed on business sentiment in its core markets of Asia and Britain

HONG KONG/LONDON: HSBC on Monday posted an 18 percent drop in quarterly pre-tax profit, missing analyst forecasts, and said it would no longer be able to meet its 2020 return-on-equity target due to a challenging revenue growth outlook.
HSBC has been looking to step up cost-cutting efforts amid a gloomier business outlook brought about by an escalating trade war between China and the United States, an easing monetary policy cycle, unrest in its key Hong Kong market, and Brexit.
Pre-tax profit at Europe’s biggest bank by assets was $4.8 billion for the third quarter ended Sept. 30, versus $5.9 billion a year earlier, HSBC said in a statement to the Hong Kong stock exchange.
The profit was lower than the $5.3 billion average of analysts’ estimates compiled by the bank.
“The revenue environment is more challenging than in the first half of 2019, and the outlook for revenue growth is softer than we anticipated at the half-year,” the bank said, adding it did not expect to meet its return on tangible equity target of 11 percent in 2020.
The London-headquartered lender, which generates the bulk of its revenue and profit in Asia, said it would rebalance capital away from low-return businesses and adjust its cost base.
“These actions, or any continuing deterioration in the revenue environment, could result in significant charges in 4Q19 and subsequent periods, including the possible impairment of goodwill and additional restructuring charges.”
The results are HSBC’s first under interim Chief Executive Noel Quinn, and is widely seen by shareholders and insiders as a report card on his auditioning for the role full time.
Quinn, 57, has made no secret that he is keen to secure the permanent appointment from Chairman Mark Tucker, who said in August the search for a CEO would take six to 12 months.
A veteran of the bank since 1987, Quinn faces the tough task of showing progress on HSBC’s key priorities of further cost reduction and turning around its perennially underperforming US business.


Saudi Aramco shares soar at maximum 10% on market debut

Updated 11 December 2019

Saudi Aramco shares soar at maximum 10% on market debut

  • Company is now world’s largest publicly traded company, bigger than Apple

RIYADH: Saudi Aramco shares opened at 35.2 riyals ($9.39) on Wednesday at the Kingdom’s stock exchange, 10 percent above their IPO price of 32 riyals, in their first day of trading following a record $26.5 billion initial public offering.
Aramco has earlier priced its IPO at 32 riyals ($8.53) per share, the high end of the target range, surpassing the $25 billion raised by Chinese retail giant Alibaba in its 2014 Wall Street debut.
Aramco’s earlier indicative debut price was seen at 35.2 riyals, 10 per cent above IPO price, raising the company’s valuation to $1.88 trillion, Refintiv data showed.
At that price, Aramco is world’s most valuable listed company. That’s more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.
“Today Aramco will become the largest listed company in the world and (Tadawul) among the top ten global financial markets,” Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange, said during a ceremony marking the oil giant’s first day of trading.
“Aramco today is the largest integrated oil and gas company in the world. Before Saudi Arabia was the only shareholder of the company, now there are 5 million shareholders including citizens, residents and investors,” said Yasir Al-Rumayyan, the managing director and chief executive of the Saudi Public Investment Fund.
“Aramco’s IPO will enhance the company’s governance and strengthen its standards.”
Amin Nasser, the president and CEO of Saudi Aramco, meanwhile thanked the new shareholders for their confidence and trust of the oil company.
The sale of 1.5 percent of the firm, or three billion shares, is the bedrock of Crown Prince Mohammed bin Salman’s ambitious strategy to overhaul the oil-reliant economy.
Riyadh’s Tadawul stock exchange earlier said it will hold an opening auction for Aramco shares for an hour from 9:30 a.m. followed by continuous trading, with price changes limited to plus or minus 10 percent.

The company said Friday it could exercise a “greenshoe” option, selling additional shares to bring the total raised up to $29.4 billion.
The market launch puts the oil behemoth’s value at $1.7 trillion, far ahead of other firms in the trillion-dollar club, including Apple and Microsoft.
Two-thirds of the shares were offered to institutional investors. Saudi government bodies accounted for 13.2 percent of the institutional tranche, investing around $2.3 billion, according to lead IPO manager Samba Capital.
The IPO is a crucial part of Prince Mohammed’s plan to wean the economy away from oil by pumping funds into megaprojects and non-energy industries such as tourism and entertainment.
Watch the video marking Aramco’s opening trading:

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