21/02/2017 BBC Business Live


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This is Business Live from BBC News with Rachel Horne and Sally Bundock.


Europe's biggest bank sees profits take a dramatic dive.


HSBC says it's been facing volatile market conditions.


Live from London, that's our top story on Tuesday February 21st.


Annual profits for HSBC collapsed by more than 60%.


Our economics editor Kamal Ahmed will talk us through what this


means for the bank - and the sector as a whole.


YouTube scraps those 30 second ads it's impossible to skip through.


Good news for viewers, maybe - but what will it mean


And investors are grappling with the latest results


from several key companies - we talk you through the good,


This is how Europe's markets outside jesting them at the moment.


And we'll be meeting the only living person who has invented and been


implanted with a medical device to cure their own chronic


It's called the Vibrant Soundbridge, and has given Geoffrey


Workers in Australia's tax office have refused bosses' pleas


to extend their working day from 4:51pm to 5pm.


What could you achieve if you spent an extra nine minutes a day at work?


Just use the hastag BBC Biz live And wherever you are -


It is amazing what you can do in a whole nine minutes! Send in your


comments on that and other stories we are covering today, it is a


packed agenda. Full year results for banking giant


HSBC has come in quite a bit below Pre-tax profit fell 62%


from the previous year, with the bank calling it a period


remembered for its largely unexpected economic


and political events. The net profit of $7.1 billion


compared with $18.87 billion recorded in 2015, and group chairman


Douglas Flint says geopolitical changes contributed to volatile


financial market conditions. Last year HSBC agreed to pay


$1.6 billion dollars to end a class action lawsuit over its involvement


in the US sub-prime mortgage scandal That is just one element that has


been going on. It's also facing pressure


to tighten up safeguards US regulators have said HSBC


has made some progress And all this comes as the bank


closes an additional 62 branches in the UK on top of the 55 announced


last year and tries to recover from the reputational damage caused


by being found guilty of taking part That is like many of its peers.


Rachel, over to you. Our economics editor


Kamal Ahmed is with me. Thank you for coming in. Sally has


run through some of the issues, that drop in profits as much larger than


expected, but overall, what has been the reaction? Overall the share


price has come off a little bit, down almost 5%, but lots of that is


to do with profit-taking, HSBC shares have gone up by over 50%


since the referendum in the UK last summer. It said it would execute a


$1 billion share buy-back. That was a little disappointing to some


shareholders who said it would be around $3 billion, so shares have


been a bit softer because of that. It shows two things, firstly it is


very hard to make money in banking in this low interest rates, low


inflation world we still inhabit. Secondly, global shots for a global


bank, things like Brexit, the election victory of Donald Trump, me


that trading tends to slightly softened, revenue is slightly


softened and profits soften slightly. In overall terms, HSBC is


robust, it revealed that its capital ratio, its core capital is now above


13%, well above target, so it is a very robust balance sheet. What


shareholders want to see is what is HSBC going to do without money, it


has been selling assets in dealing with reputational damage that Sally


spoke about, what would it do to reinvigorate growth and rebuild its


business in Asia? Donald Trump Brexit, they were issues the global


finance and trade, and perhaps the rising protectionism for a bank like


HSBC, a global bank which gets a lot of business from global trade. Going


forward, what impact will it have on the bank? Is two thirds of HSBC's


profit comes from Asia and there is a trade war between and China, which


President Trump has threatened at least, not gone through with yet but


threatens, that could be damaging to trade around the world. HSBC is one


of the biggest banks in trading so that could be something on its


profits. At the moment there is a sense that this might be the dock


before the sunlight, we have these big fiscal boosts possibly coming


for America, cutting corporation tax, the release of animal spirits


in the US economy, that would be very good for HSBC. What about in


terms of who was running the bank in the future? Douglas Flint is


expected to retire and we do not know who will succeed him, Richard


Gulliver is expected to move on in the next few years? HSBC was always


a business promoted from within, it has never had an external Chief


Executive or Chairman, some shareholders are pushing for outside


blood. No real detail on how that is going, there is a process and


Douglas Flint and Stuart Gulliver are due to move on. There are 2


megabits candidacy would look at, both Portuguese, there is the head


of UK and European HSBC and the chief executive of Lloyds bank, one


of the other big banks in the UK commerce and big candidates. There


are not that many people Houara chelated in the right way with the


right skill set to run a massive global bank. There is only a handful


of people, there could be an internal candidate, it could be


external, shareholders are most at -- are more focused on whether


bankers going to do Stuart Gulliver rather than what will happen next. I


am sure you will be putting this on the website? May well be! Is that an


order?! Some other stories, it is an extremely busy day.


The world's biggest miner, BHP Billiton, reports


a near eight-fold rise in underlying first-half net profit


to $3.24 billion from $412 million a year earlier.


And shareholders received a bigger than expected dividend


of 40 cents a share, signalling its growing


confidence amid a resurgence in commodity prices.


Good news for Intercontinental Group shareholders -


the hotel group reveals it is to issue a special


$400 million dividend for shareholders and an 11% increase


This comes as the UK-listed owner of Holiday Inn reports a 9.5%


increase in underlying profit to $702 million for 2016.


And YouTube is to scrap unskippable 30-second advertisements from 2018.


Google has confirmed that it will focus on formats that work well


for both users and advertisers, and says long unskippable adverts


on the video-streaming service are seen as a nuisance by many


I can hear you all cheering as I read that out loud!


Let's look at what is on the tablet and sticking with HSBC, all those


banking stories making the headlines. The plunger natures BC


shares, lots of other banks are reporting this week as well. -- the


plunge in HSBC shares. We chatted to Kamal before we came on air and we


talk about how the falls on the FTSE, he believes they are more


profit-taking, people selling of shares they bought in anticipation


of a larger buy-back scheme. They announced the share buy-back of


$1 billion, they expected it to be larger than that, it has done a


previous one of $2.5 billion. As Kamal Ahmed mentioned, profits are


up 50% since the June referendum. Always lots of layers in these


figures. Troubled Japanese technology giant


Toshiba wants to raise $8.8 billion from the sale of most


or all of its flash chip business. Tell us some more about this story?


Toshiba's microchips are mostly used on mobiles and tablets and it is one


of the conglomerate's most valuable businesses, if reports are accurate


they are considering a sell-off of majority stake to raise up to $8


billion, a much bigger slice of the business than the 19.9% they


previously said they would sell. Why some of the Crown Jewels? Toshiba is


trying to plug a big hole in finances due to a write-off of its


US nuclear division. One credit ratings agency said that the rating


might be smashed as a result, bad news for investors, said they were


not enthusiastic about the sale today. Toshiba stocks rose almost 2%


in early trading but closed about 1.39% lower. Thank you. That is one


of the shares on the move in Asia, another stock on the move was HSBC,


it is listed in Hong Kong as well as London, its shares in Hong Kong were


head quite badly when the results came out, shares down on the Hang


Seng something like 3.5%. That is ready's close for the States, it was


President's Day on Monday so no action on Wall Street yesterday,


they will reopen after a nice long bank holiday weekend.


Let's look at Europe, BHP Billiton shares are doing nicely if we can


move on to the European markets. And Anglo-American as well came out with


results very similar to BHP, a real turnaround, losses last year, big


profits this year, commodity prices have been on the way up. In


particular, metals. Not enough to boost the FTSE. HSBC is lower,


mining stocks higher, the FTSE down by almost 0.4%, the European markets


are headed lower. Back to Rachel. Mike Amey, managing director


and portfolio manager Thank you for coming in. I will bore


you with banking, we started with HSBC, lots of the banking stocks are


down this morning, on the FTSE. Lloyds are down 1%, RBS 1.3%,


Barclays 1.45%, Standard Chartered 2%. The banking sector has done very


well, posed Brexit, a big bounce, HSBC up 50%, so a bit of


nervousness. The other thing that is going on is in the HSBC commentary,


basically the amount of money they make on their day-to-day business


looks like it is coming in lower than expected. Roughly speaking,


they take deposits offers and land them on mortgages to us or others,


the differential between those is how they make money, when interest


rates are low, that squeezes profits. Is that why did the dens


are so important right now, another way of getting money in when


interest rates are so low? -- is that why dividends are so important?


Intercontinental hotels, Anglo-American and BHP are saying


the dividends are there, they are upping them? We are all looking for


ways to get income, frankly, with low interest rates. Sustaining the


dividend is very important. Prices because people look at other ways.


Bank deposits, they say they will not get income so if there are other


ways to do it safely they will, so the message about keeping the


dividend is trying to reinforce that.


Aside from banking stocks reporting we have minutes from the latest


Federal Reserve meeting coming out on Wednesday, what are we looking


for? Not everybody is at superlow interest rates and staying there,


the Federal Reserve has raised interest rates already and the


question is how quickly. They raised rates in December, these minutes


will be all about March or June. Our best guess is probably June rather


than March, if they have a decent couple of months worth of data


perhaps Marge, rates are going up somewhere, not all bad news.


You are coming back to do the papers, see you later.


We will find out how much might can do in terms of productivity in nine


minutes. He is thinking about that now.


Using wearable tech to tackle disability.


We'll meet the man whose revolutionary hearing implant


You're with Business Live from BBC News.


British house-builder Galliford Try has just announced a 19% rise


in pre-tax profits in its latest half year results.


The firm has set new house-building targets of 5000


Theo Leggett has been crunching the numbers.


would seem for these kind of house-builders that they are doing


extremely well? They are, good times for the house-builders because there


is so much demand for residential property in this country. According


to the Government's house-building white paper, that will continue, so


Gulliver try is pinning its hopes on that. The press release says they


are strengthening their foundations to support strategy for growth, the


worst plan of the day, in my opinion, but looking at the three


areas of their business, Linden homes, probably the most


recognisable brand, their main residential property building on,


that has very good rotted margins at the moment, it currently builds


around 1500 houses a year and wants to increase that to more than 5000.


It also has its partnership and regeneration division working with


local authorities to build affordable housing, that is all


doing rather well, expanding with reasonable profit margins. There is


another area that is business that generates big revenue but poor


margins, its infrastructure and construction business. That is wafer


thin margins at the moment. The picture overall is very good,


revenues increase profit margins are very good, but that part of the


business is looking comparatively weak.


It is hard to gauge where things will go next. There are a loft


elements that are good and strong. But we were talking to the boss of


Redrow after that White Paper was released. If you read the statement


that Galliford Try put out this morning, they state we continue to


monitor market conditions and consumer confidence closely and are


mindful of the uncertainty in the economic environment. Who would not


be right now? There is so much uncertainty out there. They say as


emphasised by the housing White Paper, the Government remains


committed to increasing housing supply. They say the market


continues to enjoy good mortgage availability along with low interest


rates and the stimulus of Help To Buy. The outlook seems good for


them. They are taking advantage and they are planning to expand.


You see how much Theo Leggett can do in less than nine minutes. We thank


you for your time. You're watching Business Live.


Our top story: Europe's biggest bank


sees its annual profits HSBC says volatile market


conditions are to blame. A quick look at how


the markets are faring. We have had results from many


companies. Take a look at the Business Live page. It will detail


it all for you and also talk you through the various winners and


losers. The innovators behind tech companies


often have extraordinary stories. But few can match the experience


of the next person we're featuring in our week long


Disability Works series. Geoffrey Ball is the chief


technology officer of Med-El, which is a global company


researching the field of hearing loss and making


implantable hearing systems. Geoffrey developed hearing loss


as a child, but later became frustrated by traditional hearing


aids, so searched After completing a biomedical


degree, he worked in the field of neuroscience, biomedical


and auditory research. This lead him to develop


and personally test a middle ear implant, known as the Vibrant


Soundbridge. His situation is unusual


because he is both inventor and patient of the medical device


aimed at curing a chronic Geoffrey Ball is Chief Technology


Officer at MED-EL and joins us. Good to see you. Welcome to the


programme. Thank you. Just tell us the story from the beginning. We do


hear of people struggling with hearing loss or profound deafness,


but you don't hear of them fixing the problem themselves. It is very


unusual. Yes, well, I lost my hearing as a toddler. I had a high


fever and after that I could no longer hear. I wore hearing aids for


a long time. I grew up in Silicon Valley, California and I got help


from special educators and from speech pathologists and I was quite


lucky. But hearing aids never worked for me. They just made everything


louder, but they didn't make everything clearer. So I decided


well, I'm going to come up with something I want, an implant that's


going to fix it because you have to go into the ear. I asked my doctors


at Stamford University when is the implant coming? They said next year.


After several years of that, I finally graduated from university


and I said maybe I can come to the lab and help you out. So I spent


years working in the lab. I didn't have an epiphany. I worked out how


to make an implant that would work and I started the company and that's


how we went. In terms of your eureka moment, building that device that


worked. For many inventors, that's going to bring a certain level of


pleasure and satisfaction, but for you, it wasn't that achievement, it


was going to improve your life? It was going to improve my life, but it


was a sense of relief because I built hundreds of devices that


didn't work, and to come up with the one that did work was a great day


and then, of course, the real challenge happened. This happened in


my garage in Silicon Valley which is located around the corner from Steve


Jobs' garage who started this fruit company called Apple! I hope he did


OK with that! And today, that's probably the last medical device


that will come out of a garage like that! Just tell us, you created the


device. You then had to raise funding to launch it, start a


company and then tell us about the day you tried to launch? Well, when,


first I had to get the device implanted and having your own device


implanted and having it work was really, like I was so happy and that


was great. You could hear things that I never heard before like


birds. I never heard wind blowing through the trees, but then we went


to launch the product and we did trials in Europe and we got approved


here and we were doing very well as a company and then we launched the


company. I had about 150 employees, I had my doctors, at a conference in


the United States and we launched it on the worst day in history to


launch a company which was 11th September 2001. After that, it was


really hard for us to even talk about elective implants for people.


So, inventors and the leaders in the field of cock lard implants bought


my company and moved me to Austria my company and moved me to Austria


and I have been working there for 15 years and we have tens of thousands


people now implanted with the devices and we have a family of


hearing products for different types of hearing loss. You talk about how,


you know, if somebody has eyesight problems, they go to an optician and


there are lots of different options and you would go and a hearing aid


was the only option? You've revolutionised that right now? It


was just a hearing aid. I didn't want those. They don't work very


well for all people. Hearing aids have got much better. They work well


for mild and moderate hearing loss. There are several companies that now


sell them. But for what is so cool is today for kids with profound


hearing loss and severe hearing loss, they have so many options that


I never had. And they have cock lard implants which use lick theatrical


stimulation, we have the sound bridge which uses the middle ear and


what the positions have done is so amazing, and also we implanted some


of our first devices here at St Tom's right here in London so it is


good to be here. Geoffrey, it is fascinating to hear


your story. Thank you for coming in and tell us about it. I'm really


glad that you were determined. It changed thousands of people's lives.


Geoffrey Ball Chief Medical Officer at MED-EL.


You can find out more about the weeks coverage


at bbc.co.uk/disability and on social media search


It is a theme we're following. The challenges of disability in the


workplace. In a moment we'll take a look


through the business pages, but first here's a quick reminder


of how to get in touch with us. The Business Live page


is where you can stay ahead with all the day's


breaking business news. We will keep you up-to-date


with all the latest details, with insight and analysis


from the BBC's team of editors Get involved on the BBC business


live web page: bbc.com/business, on Twitter @BBCBusiness and you can


find us on Facebook Business Live on TV and online,


whenever you need to know. What did you achieve in your nine


minutes? The story is an Australian story about one of the Government


agencies trying to extend the working day at the moment. It


finishes at 4.51 and the hope was to get it to 5pm which was, which the


employees stuck with 4.51, that extra nine minutes is really what


the Government was trying to get out of their employees. They were


pushing it, saying it would increase productivity. What do you guys think


you can do in nine minutes. Mason says make a cup of tea. Relax.


Regain used energy. Somebody else said they could close a sale in nine


minutes. Yes! , "Just pay them more if you want them to work for it. You


get nothing for nothing." They were offering a slight pay rise, but the


nine minutes added up to... Five days a year. There are various ways


you could do that. You could put it as a perk. If you do an extra nine


minutes, you get five days off extra holiday! Talking about the cost of


moving or having Americans make the stuff that many are making in


factories in Asia? There is the challenge with where production is


located and trade particularly under the new US presidency and it looks


as if this one is about whatever happens, it will be much cheaper to


make it in China. We'll keep an eye on that. It is a big issue at the


moment. There will be more business news


throughout the day on the BBC Live webpage and on World Business


Report. Hello. In some parts of the British


Isles Monday turned out to be a glorious day. Our Weather Watchers


were out and about capturing the best of it and the temperatures


caught the eye as well. Widely well on into the teens across the British


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