HSBC stock falling on $3B hit from China operations

Shares of HSBC Holdings (HSBC, 0005.HK) are moving lower Wednesday morning as the universal bank took a $3 billion hit from its operations in China, taking its quarterly profit down 80%. In addition, the company's guidance raised concerns with some analysts who called it unclear.

Yahoo Finance Anchors Brad Smith and Seana Smith break down the latest development for HSBC and what it could mean for the company moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

- Take a look at another trending ticker that we're watching this morning. HSBC shares moving to the downside off nearly 9% in early trading after taking a $3 billion hit to its operations in China, sending its quarterly profit down 80%. We're seeing that concern reflected in the early action here this morning when it comes to HSBC. So profit hit very hard. Also, their guidance is an issue here with investors. Unclear guidance, one of the concerns here amongst the sell side analysts in terms of what the future looks like for HSBC.

And Brad, I think simply put, Jefferies calling it a messy set of results here for the company. Morgan Stanley saying that the lower than expected final dividend could weigh on the stock. In the short-term, we're seeing that reflected, that concern reflected in the early market action here this morning. Again, shares off nearly 10%.

- Yeah, reported revenue was down 11% to $13 billion. They said that due to the impact of the fourth quarter, impairment relating to the sale of their retail banking operations in France, that also hit on some of the disposal losses relating to repositioning plus risk management activities there.

But there was one thing that really struck my attention here within this report, and it's the fact that they're implementing what we've heard time and time again, more cost discipline, targeting cost growth of approximately 5% for 2024 compared to 2023 on a target basis. And that really built into their business plan for this year.

But growth and spending efficiency, two of the big terms here that continue to come up time and time again when you do have a quarter like this and a company trying to turn around narrative as well.