Hsbc shares have fallen down after the giant company saw higher than expected drop in its annual tax before profits in 2016. It was a 62% drop in the annual pre-tax profits. As per the Thomson Reuters data, analysts had made an average estimate of $14.4 billion of annual pre-tax profits but HSBC reported $7.1 billion as compared to the $18.87 billion observed in the last year. Other than this, the biggest bank of Europe, HSBC has also announced buy-back of $1 billion share. The company’s shares in Hong Kong have also got down by 3.5%.

HSBC attributed the drop to impairment charge

HSBC has considered the reason of fall to be one-off charges that included sale of operations in Brazil. The bank said that its performance is satisfactory in broad terms considering the volatility in financial conditions. However, it warned global protectionism rise to be a concern. The bank said that the year 2016 would be remembered as the year with unexpected political and economical events related to the UK’s vote of leaving the European Union and the election held in the US. There was a drop of 82% net profit in 2016 when compared to the previous year. With the US election held in 2016, there are concerns about rising protectionism for the year 2017.

Uncertainties created volatile financial conditions

The chairman of HSBC, Douglas Flint said that the economical and political changes indicated the changes in the relationships of geopolitical and economical in nature within and between the developed nations and the rest of the world. These uncertain changes only created volatile financial conditions due to the changing investment activities that reduced $13.52 billion net profit in 2015 to $2.49 billion, according to the bank.

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This is predominating in various parts of the world due to change in technology and inequality of income, and if this trend is further amplified, it can lead to disrupted global trade and affected traditional line of business.

Relocating headquarters to Paris

In the last year, HSBC had confirmed that its European headquarter will remain in London despite of the UK’s vote to leave the European Union.

But after the results were announced, Mr. Flint said that as per the current plan, it may need to relocate from London to Paris over the coming two years and it depends upon the development of negotiations. The bank further said that it had all the infrastructure and licenses to continue providing support to its clients once the UK leaves the European Union.

HSBC’s digital transformation initiatives

The HSBC bank earns most of the money from outside the United Kingdom and Asia contributes to the major portion of its pre-tax profits globally. In the last year, the bank had closed 223 branches in the UK and further revealed its plan to shut down its 62 branches in the UK since more customers were transacting online.

Stuart Gulliver, the Group Chief Executive said that above $2 billion was invested by the bank as a part of its digital transformation initiatives for improvement of services to its customers. Since the year 2015, the HSBC had been on cost-cutting drive with the plan to cut down 8000 jobs in the UK and achieve $5 billion as savings.