HSBC’s 2017 pre-tax profit jumps 142%, but lags forecast due to US tax impact

The bank’s year-ago profit figure reflected a $3.2 billion impairment of goodwill in HSBC’s global private banking business in Europe and the impact of its sale of operations in Brazil. (Reuters)
Updated 20 February 2018
0

HSBC’s 2017 pre-tax profit jumps 142%, but lags forecast due to US tax impact

HONG KONG: HSBC Holdings’ 2017 pre-tax profit rose 142 percent as the lender avoided the multi-billion dollar restructuring costs that marred its 2016 results but the profit growth lagged expectations as it took a writedown following US tax changes.
Europe’s biggest bank by market capitalization reported on Tuesday a profit before tax for 2017 of $17.2 billion, compared with $7.1 billion the year before and below the average estimate of $19.7 billion, according to Thomson Reuters data based on forecasts from 17 analysts.
Those estimates did not all take into account the tax writedown, triggered by cuts in the US corporate tax rate which meant banks had to book losses on deferred tax assets they built up during loss-making times.
HSBC said in its earnings statement that its 2017 financial results include a charge of $1.3 billion relating to the “remeasurement of US deferred tax balances” to reflect the reduction in the US federal tax rate to 21 percent from 2018.
The bank’s year-ago profit figure reflected a $3.2 billion impairment of goodwill in HSBC’s global private banking business in Europe and the impact of its sale of operations in Brazil.
HSBC’s reported revenues rose to $51.4 billion from $48 billion a year ago.


Lufthansa announces overhaul of budget carrier Eurowings

Updated 24 June 2019
0

Lufthansa announces overhaul of budget carrier Eurowings

  • Lufthansa cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16
  • Eurowings’ long-haul business would be managed by Lufthansa in the future

BERLIN: Lufthansa on Monday announced a turnaround plan for Eurowings in which the budget carrier will focus on short-haul flights and seek a 15 percent cut in costs by 2022 in the hope of returning to profit.
The German airline cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16. Eurowings’ revenue was also forecast to fall sharply in the second quarter.
Lufthansa said its Eurowings fleet would be standardized on the Airbus A320 family and it would seek to boost productivity at Eurowings by limiting itself in Germany to one air operator’s certificate.
Brussels Airlines — the Belgian national flag carrier which Lufthansa took control of in 2016 — would not be integrated into Eurowings, Lufthansa said. A turnaround plan for Brussels Airlines will be announced in the third quarter.
Lufthansa also said it would start pegging its dividend payout ratio to net profit in the future to give the group more flexibility. It would pay out a regular dividend of 20 percent-40 percent of net profit, adjusted for one-off gains and losses.
Lufthansa said Eurowings’ long-haul business would be managed by Lufthansa in the future.
Carsten Spohr, Chief Executive Officer of Lufthansa, said Monday’s announcements sent “a clear signal that this company cares about its shareholders and tries to create value for them.”
Lufthansa said its Network Airlines — made up of Lufthansa, Swiss and Austrian Airlines — would aim to use innovations in sales and distribution to make a contribution to increasing unit revenues by 3 percent by 2022.
Network Airlines will aim to reduce unit costs continuously by 1 to 2 percent annually, the airline said.