HSBC Drops After Earnings

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U.K. bank HSBC (HBC) missed earnings expectations for fiscal 2010, and reduced its return on equity forecast, sending shares down 4.5% in early trading.

HSBC recorded 73 cents in earnings per share versus analysts’ expectations for 78 cents in 2010. The company’s loan impairment charges fell to $14.04 billion, from $26.49 billion in 2009, as U.S. consumer finance and cards showed strong improvement. But HSBC decreased its expectations for return on equity to 12 to 15% from 15% to 19%, citing new capital requirements. ROE came in at 9.5% in 2010.

“Now that we have better visibility on the impact of increased capital requirements, we believe that higher costs of the evolving regulatory framework will, all other things being equal, depress returns for shareholders of banks. We will therefore target a return on average shareholders’ equity of 12-15% in the future.”

Original Article Source by Barrons.com