HSBC Holdings Plc (NYSE: HSBC) posted worse-than-expected fourth-quarter results on Monday, saying that impairment charges of loans to oil and gas companies and slower Asian Growth hit revenue.
In the last three month of 2015, Europe’s largest bank posted a net loss of $1.3 billion, while it had a net profit of $511 million a year ago.
The disappointing result was hurt by the increase in bad-loan charges. According to Bloomberg, Impairments on bad loans and credit-risk provisions increased by 32 percent to $1.64 billion in the quarter. The total charges were $3.7 billion in 2015, exceeding the consensus analyst estimate of $3 billion.
The bank said the oil and gas sector accounted for almost $1 billion of loan impairment charges in the last three month of 2015. But the bank was still optimistic in that industry, saying that about half of the firm’s exposure is to state-owned companies.
Slower Asian growth also account for the disappointing result. Chief Executive Officer Stuart Gulliver in June said the bank unveiled a new strategy to boost investment in China, exit unprofitable countries and cut as many as 25,000 jobs, aiming to save up to $5 billion costs by the end of 2017. However, the company last week decided not to relocate its headquarter to Hong Kong and stay in London.
"All of our initiatives to reduce costs are underway and we expect further progress in 2016," the bank said on Monday.
What’s worse, the bank also reported that the company is under investigation by Securities and Exchange Commission for its hiring practices in Asia.
"HSBC has received various requests for information and is cooperating with the SEC's investigation.” The bank said.