Banking giant HSBC today warned of a “bumpier” global financial outlook due to China’s slowing economy as it reported a slight dip in annual profits.
Europe’s biggest lender posted a net profit of $13.5 billion (£9.5bn) for 2015, down 1.2 per cent from the year before.
The group also announced a surprise $1.3bn loss for the final quarter, compared with a $511 million profit in the same period the previous year.
Chairman Douglas Flint said the results were “broadly satisfactory”, adding that last year was marked by “seismic shifts in global economic conditions,” notably sharp falls in prices for oil and other commodities, partly stemming from slowing growth in China.
The London-based bank has been steadily trimming back its global operations as part of a sweeping reorganisation announced in June to focus on Asia, where it expects the region’s growing affluence to drive profits. It is slashing thousands of jobs and selling off businesses in countries like Brazil while expanding in China, particularly the wealthy Pearl River Delta manufacturing region in the country’s south.
HSBC said that cost-cutting measures were already having an impact and it is now a “leaner business” than it was half a year ago.
However, Flint warned of challenges from the Chinese economic slowdown.
He said: “China’s slower economic growth will undoubtedly contribute to a bumpier financial environment, but it is still expected to be the largest contributor to global growth as its economy transitions to higher added value manufacturing and services and becomes more consumer driven.”
Economic growth in China, the world’s second-biggest economy, dipped to a 25-year low of 6.9 per cent last year. Officials are forecasting growth of between 6.5 and 7 per cent this year.