HSBC 2016 pre-tax profit drops 62 pct

Global banking giant HSBC on Tuesday said its pre-tax profit in 2016 dropped 62.3 percent from 2015 to 7.11 billion U.S. dollars.

"This decline principally reflected the impact of significant items, most of which had no impact on capital, even though they were material in accounting terms," said Douglas Flint, group chairman of the HSBC Holdings plc, in a report filed to the Hong Kong Exchange and Clearing Limited.

On an adjusted basis to measure management and business performance, the bank's profit before tax was 19.3 billion U.S. dollars, down 1.2 percent from the 19.5 billion achieved in the prior year, the report said.

Reported revenue stood at 48 billion U.S. dollars, 20 percent lower primarily driven by unfavorable movements in significant items and currency translation, it said.

These significant items included a 3.2-billion-U.S. dollar impairment of goodwill in global private banking in Europe, costs to achieve of 3.1-billion-U.S. dollar, adverse fair value movements of 1.8-billion-U.S. dollar arising from changes in credit spreads on debt designated at fair value, and the impact of sale of operations in Brazil, it said.

HSBC will return to shareholders up to 1 billion U.S. dollars by way of a share buy-back which is expected to complete in the first half of 2017, it said.

Shares of HSBC slumped 5 percent on Tuesday to 65.55 HK dollars. Endit