Bloomberg reported on August 2, 2016, about the dismal financial performance recorded by HSBC Holdings PLC during the second quarter of 2016. In a press statement issued by the banking group’s chairman Douglas Flint, the bank experienced a sharp reduction in its second quarter overall profits by 45 percent, hence, falling short of the analysts’ expectations. Further, to prevent a sharp fluctuation in its dividend levels in the near future the company also announced its intentions to buy back shares worth $2.5 billion before the end of the year, as a remedial measure.
The poor performance can be attributed to a host of economic and political challenges with which HSBC is already struggling. It is currently witnessing slow economic growth in China, coupled with the possibility of a recession-like situation likely to emerge in the U.K. All of this have forced it to lay off thousands of employees and redeploy assets worth $150 billion in the Asian market. The company will also temporarily defer its goal to generate a return on equity (ROE) exceeding 10 percent by the end of 2017.
Moreover, the banking group is dealing with organizational and corporate restructuring issues. Both Flint and Stuart Gulliver, Chief Executive Officer of HSBC are about to retire soon, causing the board to begin feeling apprehensive about finding suitable replacements.
Written by Bashar Saajid
Edited by Cathy Milne
Bloomberg: HSBC’s Profit Falls 45% as Bank Plans $2.5 Billion Buyback
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