Results round-up

HSBC has missed full year profit consensus forecasts by 8%, as it fell short of fourth quarter targets by a long way.

The FTSE 100 bank posted a reported profit before tax of $18.9bn (£13.3bn) for the year to 31 December 2015, up a mere 1.069% from $18.7bn in 2014.

However adjusted profit before tax dropped from $22.0bn to $20.4bn; below market consensus range of $22.0bn-$22.7bn.

For the fourth quarter, adjusted profit before tax came in a $3.4bn, below consensus forecasts of $5.1bn. Adjusted operating expenses for the full year rose 5% to $36.2bn due to wage inflation, business growth and investment in regulatory programmes and compliance. The bank said expenses in the second half were broadly in line with the first half after excluding the UK bank levy, which reflected strong cost management and the initial effect of its cost saving programmes.

It also said adjusted revenue rose 1% to $57.8bn from $57.2bn in 2014, with growth in Global Banking & Markets, Commercial Banking and Principal Retail Banking and Wealth Management.

The group has also made good progress on reducing its risk weighted assets, cutting $124bn of assets – 45% of its 2017 target – and an agreement signed to sell its operations in Brazil. The bank highlighted that the current economic environment is uncertain.

“But our diversified banking model, low earnings volatility and strong capital generation give us strength and resilience that will stand us in good stead,” it said.

“We remain focused on delivering our nine remaining strategic actions by the end of 2017.” Group chief executive Stuart Gulliver said targeted investment, prudent lending and its diversified, universal banking business model helped HSBC achieve revenue growth in a difficult market environment.

“We made a good start in implementing the plans that we announced at our Investor Update in June. Delivering against these plans remains our primary focus.”

HSBC declared a fourth interim dividend of $0.21 per share, taking the total dividend for the year to $0.51.

“While we see HSBC as a risk-off proxy (outperforming falling markets and vice-versa), these results highlight earnings pressures driven by revenues as well as continuing pressures on operating leverage,” investment bank Nomura noted on Monday.

“We are currently c6% below 17E revenues and PBT before FY15 results, and therefore expect consensus to catch-up while seeing downside risks to our estimates due to the macro-economic environment.”

The bank also confirmed the US Securities and Exchange Commission is investigating HSBC among multiple financial institutions over its hiring practices. The investigation centres on the hiring practices of candidates referred by or related to government officials or employees of state-owned enterprises in Asia-Pacific.

Bovis Homes reported a jump in full year pre-tax profit and revenue as legal completions and prices rose and the housebuilder sounded an upbeat note on 2016.

For the year ended 31 December, pre-tax profit came in at £160.1m up from £133.5m in 2014, on revenue of £946.5m, up 17%.

The company said revenue growth was driven by record legal completions and a strong increase in the average sales price.

The number of legal completions was up 8% from the previous year to 3,934 while the average sales price advanced 7% to £231,600.

Meanwhile, forward sales at the year-end were 2,003 compared with 1,752 in 2014.

Chief executive David Ritchie said: “We have delivered record profit driven by another year of record volume. We have invested well during 2015 in new consented land and achieved a strong level of conversion from our strategic land bank.

“While it has been a time of operational challenge with fast moving market conditions, we are delivering our strategic growth plan and have evolved our management and business structure at the start of 2016 to support further growth.”

The board recommended a final dividend of 26.3p per share, giving a total dividend for the year of 40p versus the previous year’s 35p.

Looking ahead, Bovis expressed confidence that if market conditions remain stable, it will be able to improve return on capital employed further in 2016.

“In the current housing market, our plan envisages the business delivering sustainable growth over the next few years to achieve annual volumes of between 5,000 and 6,000 new homes,” said Ritchie.

Shore Capital said profit was a touch ahead of its forecast of £157m but more or less in line with consensus.

“A largely in-line statement with a still generally positive bent highlighting the still very favourable market climate at the desire to expand the business,” it said.

However, the brokerage said that at this stage, it can see nothing that would materially alter its forecasts for any of the future years and so it maintained its pre-tax profit estimate of £184m for full year 2016, which is in line with consensus.

“We remain cautious of the house builders generally on valuation grounds and through concerns about sustainability of margins through the rest of this cycle and, more particularly, beyond this cycle.”

Liberum said Bovis shares look cheap compared to the sector, but return on equity is weak compared to peers and the brokerage sees better value in Bellway, which “has an excellent record of growing without operational hiccups”.