Brexit and Trump warning as HSBC profit plunges 62%

HSBC has warned of challenges during the year ahead after reporting a 62% profit fall during a year shaken by "largely unexpected economic and political events".

The banking giant said uncertainties over Brexit, together with Donald Trump's protectionist trade stance and European elections posed risks over coming months.

It confirmed that the decision to leave the EU meant it "may need to relocate some 1,000 roles from London to Paris progressively over the next two years, depending on how negotiations develop".

HSBC shares were 6% lower in early trading in London.

Pre-tax profit of $7.1bn (£5.7bn) for the year compared with $18.9bn (£15.2bn) in 2015. In the final quarter of 2016, the bank swung to a $3.4bn (£2.8bn) pre-tax loss.

Chairman Douglas Flint said: "2016 will long be remembered for its significant and largely unexpected economic and political events.

"The uncertainties created by such changes temporarily influenced investment activity and contributed to volatile financial market conditions."

But he added that the bank's performance against this background was "broadly satisfactory".

The fall in profits was largely blamed on one-off accounting costs including a write-down of its global private banking division in Europe and the impact of the sale of its Brazil business, as well as investments it has been making with the ultimate aim of cutting costs.

Mr Flint welcomed the "additional clarity" on Brexit given by Theresa May's key speech setting out the UK's plans for the divorce from the EU.

He said: "The scale of the challenge of negotiating across the entire economic landscape, as well as addressing the legislative and other public policy adjustments that will be required, has become clearer."

Mr Flint said HSBC strongly endorsed the "widely shared" backing for a transitional phase between Britain's current relationship with the EU and its future status outside the bloc.

The bank has upgraded forecasts for economic growth reflecting the robust performance of the US economy and China holding up well, though it said these were only partial reversals of earlier downgrades made "after uncertainty was elevated as a result of the unexpected political events".

But it highlighted risks including European elections - as France's far-right presidential candidate Marine Le Pen gains traction in polls.

HSBC also pointed to "possible protectionist measures from the new US administration impacting global trade" in addition to "uncertainties facing the UK and the EU as they enter Brexit negotiations".

The bank has already been making big changes to try to reshape its business.

In 2015, HSBC announced a radical overhaul to cut annual costs by $5bn (£4bn) over two years by shedding 50,000 jobs worldwide, exiting unprofitable businesses and focusing more on Asia.