HSBC (London Stock Exchange: HSBA-GB) announced a 1 percent rise in pre-tax profit for 2015, as Europe's biggest bank by assets deals with volatile markets, ongoing cost-cutting efforts, and leadership uncertainties.
Before tax, full-year (FY) profits for last year came in at $18.8 billion, missing Reuters expectations for $21.8 billion. Adjusted revenue rose 1 percent in 2015 to $57.7 billion, little changed from $57.2 billion in 2014. Meanwhile, return on equity for the year stood at 7.2 percent, a smidgen lower than 7.3 percent in 2014.
For the last three months of 2015, the lender recorded a net loss of $1.3 billion, compared with a net profit of $511 million a year ago.
HSBC's Hong Kong-listed shares traded 1.5 percent higher following the results, with London shares slated to open in a few hours' time.
"HSBC is better balanced, better connected and better placed to capitalize on higher return businesses than it was 12 months ago," the bank said Monday.
"All of our initiatives to reduce costs are underway and we expect further progress in 2016," the bank said on Monday. It expects to deliver further reductions in risk-weighted assets this year, in addition to a decrease of around $33 billion from the sale of its Brazilian business.
Full-year earnings per share and dividends per ordinary share were $0.65 and $0.51, respectively.
But analysts are worried the bank may be unable to maintain such payouts as it undergoes a strategic re-balancing program. Last year, HSBC said it aims to increase revenues by moving a major chunk of its assets to higher growth markets, namely Asia, and cut $5 billion in costs by 2017.
Increasing costs, a bank levy and a lack of growth are all factors that could make it unlikely for HSBC to sustain yields at current levels, explained Dickie Wong, executive director of Kingston Securities.
While HSBC is in a better shape than peer Standard Chartered after implementing structural changes, there isn't much upside for the stock, Wong added.
A slew of headlines surrounding the bank's remuneration policy in recent weeks suggest the bank isn't wasting any time in achieving its targets.
Over the weekend, the Financial Times reported HSBC will decrease pension payments for top executives, making them equivalent to 30 percent of salaries, from 50 percent previously, following shareholder complaints. That will cut chief executive officer (CEO) Stuart Gulliver's allowance from 625,000 pounds ($892,906) previously to 375,000 pounds.
However, it has faced pushbacks on other fronts. HSBC said earlier this month that it would not freeze 2016 pay for global employees following staff protests.