HSBC posts an 86 percent fall in pretax profit for the third quarter and warns of a dim outlook for its British business in 2017 following the vote to leave the European Union. Sara Hemrajani reports.
A headline-grabbing profit drop at HSBC... But a look beyond the initial numbers reveals a less grim picture. While the bank saw quarterly pretax profit fall 86 percent, that hit is mostly attributed to a one-off charge. The sale of HSBC's Brazilian unit booked a loss of $1.7 billion. Analysts who've pored over the results say they see improvements elsewhere -- and the bank's shares are up nearly 5 percent in London. (SOUNDBITE) (English) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "It does appear as if HSBC appears to have got to grips with some of the operational issues and regulatory issues that have been dogging the business for quite some time. So an underlying improvement in profitability to the tune of about 7 percent or so is a pretty good performance." Still, HSBC is bracing for a tough 2017. CEO Stuart Gulliver is warning of a "challenging" year for its UK retail business as Brexit looms. Gulliver's legacy is also coming into focus as he prepares to leave HSBC in 2019. Investors are beginning to ask who'll be taking the top position. (SOUNDBITE) (English) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "I think that the key issue for HSBC going forward is how the business manages the succession associated with Stuart Gulliver's departure and Douglas Flint's departure. And their replacements are going to be important as far as strategic decision and planning is concerned for the future." HSBC will have to reassure shareholders that its next senior executives have the skills and stamina to run Europe's biggest bank.