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HSBCs 2016 profit slumps 62 percent on writedowns as outlook dims


´╗┐HSBC Holdings (HSBA. L) reported a 62 percent slump in annual pre-tax profit that fell way short of analysts' estimates as the British bank took hefty writedowns from restructuring and pointed to brakes on revenue growth. HSBC shares slid more than 6 percent after the company reported revenues fell by a fifth from 2015, underscoring the challenge it faces to boost returns amid low global interest rates and slowing economic growth in its core markets of Britain and China. Europe's biggest bank by assets generated profit before tax of $7.1 billion in 2016 compared to $18.87 billion for the previous year, well below the average analyst estimate of $14.4 billion according to Thomson Reuters data. HSBC also announced a new $1 billion share buy-back, as the lender continued to return cash to shareholders from the sale of its Brazilian business. The bank's core capital ratio was 13.6 percent, against expectations of 13.8 percent, and analysts said the disappointing overall results could drive down forecasts for the stock. The bank signaled a number of factors that would pressure its revenues in 2017, including a $500 million increase in regulatory capital costs, lower interest rates in Britain and adverse foreign exchange rates."We think weak income trends and significant guided headwinds mean consensus downgrades today," Jason Napier, analyst at UBS, wrote in a research note on Tuesday.

SWISS MISS HSBC fell to a $3.4 billion fourth-quarter loss, against analysts' expectations for a profit, on a $3.2 billion impairment in its private banking business as the lender's accounting valuation of the unit caught up with years of declining performance. HSBC effectively built out its Swiss private bank from its $10 billion purchase of Republic National Bank of New York and Safra Republic Holdings in 1999, banks controlled by Lebanese financier Edmond Safra. But the subsequent emergence of major compliance failures at those operations ate into the bank's bottom line and hurt its reputation, leading HSBC to radically restructure the business. HSBC CEO Stuart Gulliver said the restructured private bank is now viable as a slimmed-down operation providing advice to wealthy clients referred from the lender's other business lines.

"What this doesn't mean is that we are selling the private bank... it means we have restructured the private bank and that's now behind us," Gulliver told Reuters. BUYBACK The $1 billion share buy-back takes HSBC's announced buy-backs since the second half of 2016 to $3.5 billion following the bank's disposal of its Brazil business last July in a $5.2 billion deal.

The buy-back program has driven the lender's shares to be among the best-performing European bank stocks since the June 23 EU vote, climbing 53 percent in London against a 28 percent increase in the STOXX Europe index of 600 banks . SX7PHSBC's Gulliver said on Tuesday the bank had seen little impact from the referendum outcome on its business but that it was still on track to relocate 1,000 of its 43,000 UK-based workers to Paris once Britain leaves the EU."There will be 1,000 jobs that will have to move, because it would be unlawful for that work to be carried out from the UK, but I don't think this is a problem for the city of London," Gulliver said. HSBC Chairman Douglas Flint confirmed in the bank's annual report that it planned to name his successor by the end of the year, but did not offer any update on progress in finding suitable candidates. HSBC rival Standard Chartered

Huawei seeks to exploit Samsung gap with new smartphone


´╗┐BARCELONA Huawei [HWT. UL] is introducing a mass-market version of its premium business phone, to take advantage of a gap created by the withdrawal of Samsung's flagship Galaxy Note 7 after a crisis with its batteries catching fire. Huawei has aggressively expanded its mid- to high-end phones and is going head to head in Asia and Europe with Apple and Samsung in the premium phone market. Huawei's new P10 line is expected to be cheaper than the business-oriented Mate 9, with new features including facial detection that can tell whether a user is taking a selfie or a picture with more people and select its camera mode accordingly. Huawei, the world's third-largest phone maker after Apple and Samsung, is seen by industry analysts as having the best hope among rival Android smartphone makers of capitalizing on Samsung's woes. Richard Yu, chief executive of Huawei's consumer business, said last year he wanted to make Huawei the world's No. 2 phone maker within two years even before Samsung's Note 7 meltdown. Huawei unveiled the P10 and larger P10 Plus at the annual Mobile World Congress in the Spanish city of Barcelona on Sunday. They feature dual Leica rear camera lenses, a 40 percent boost in battery life and software automation improvements.

While these features are similar to those found in the company's top-of-line Mate 9 smartphone, launched in November, the new models are expected to sell for as much as $100 less per device, if Huawei follows its traditional pricing strategy. The company has yet to disclose the actual price of the P10 line, which can also learn about users' habits and automatically put the most frequently used apps in easy reach.

Samsung withdrew the Galaxy Note 7 last October after faulty batteries led some devices to catch fire, leading to a loss of consumer trust, wiping out $5.3 billion of operating profit, and allowing Apple's iPhone to overtake it in sales. It has not launched new models since then and is expected to reintroduce its flagship S8 phone in April. Samsung's smartphone market share dropped to 17.7 percent in the fourth quarter, while Apple's rose to 17.8 percent, according to market research firm Strategy Analytics.

Huawei, which made its name as a builder of telecom networks and only entered the phone market this decade, narrowed the gap, expanding its market share to 10.2 percent from 8.1 percent in the last quarter of 2015. Huawei also presented a new smartwatch, two years after it entered the market. The Watch 2 has a sporty look and targets fitness users.