HSBC (Hongkong and Shanghai Banking Corporation) reduced its profitability targets on February 28, 2011 because of the cost of stiff global bank regulation. The global financial services company headquartered in Canary Wharf, London, United Kingdom disappointed investors as its 2010 profits came in slightly below analysts’ forecasts.
Pre-tax profits for the year ending December 31 more than doubled from 2009 to $19 billion, according to HSBC.
From in.news.yahoo.com:
HSBC said it had made a good start to the year but its new chief executive Stuart Gulliver cut the bank’s long-term return on equity (ROE) target to 12-15 percent from a previous 15-19 percent target.
HSBC shares, which had been trading up 2 percent before the results, fell back and were down 3.1 percent at 689 pence by 0838 GMT.
“The main disappointment is that the net income missed analysts’ estimates by $0.5 billion and that has led to a sharp share price drop after the announcement,” said Mic Mills, head of electronic trading at ETX Capital.
Ion-Marc Valahu, co-founder and fund manager at Swiss firm ClairInvest, also said there was disappointment at the scaling back of HSBC’s return on equity target.
Valahu said, “Overall, it’s a good set of numbers but on the net income figure, they came in a little shy on what analysts were expecting. The return on equity target is also a little light.”
