HSBC warned it may have to delay some investments this year as Europe's biggest bank missed 2018 profit forecasts due to slowing growth in its two home markets of China and Britain. HSBC reported a drop in fourth-quarter revenue amid tumbling stock markets that sapped customer's confidence in investing.
The results spoke to a wider problem for European banks, which are struggling to return to growth after a decade of post-crisis restructuring due to a worsening global economic outlook.
At the end of his first year in charge, Chief Executive John Flint said HSBC may have to delay investment plans in order to avoid missing a key target known as 'positive jaws' - which tracks whether the bank is growing revenues faster than costs - for a second straight year.
We will be proactive in managing costs and investment to meet the risks to revenue growth where necessary, but we will not take short-term decisions that harm the long-term interests of the business, Flint said on Tuesday, after HSBC reported a lower-than-expected 16% rise in 2018 profit before tax.
In June, Flint had said HSBC would invest US$15-US$17 billion over three years in areas including technology and China, while keeping profitability and dividend targets little changed.
The key thing is just to moderate the pace of investments ... not to cancel it or change the shape of the investments, Flint commented.
The bank said it failed to achieve positive jaws in 2018 due to the weakness of markets in the fourth quarter.
A combination of U.S.-China trade tensions, central banks turning off the money taps and cooling growth in former hot spots wiped 10 percent off MSCI's 47-country world stocks index last year, its first double-digit loss in any year since the 2008 global financial crisis.