We made good progress in 2016. Our diversified business model performed well in challenging conditions and the implementation of our strategic actions is well advanced.

Reported profit before tax for 2016 was USD7.1 billion, down USD11.8 billion on 2015. This reflected a number of large significant items, including a write-off of all the remaining goodwill in Global Private Banking in Europe, an accounting loss on the sale of our Brazil business, and investments to transform the business in line with our strategy. Adjusted profits were broadly unchanged year on year, following solid performances by our global businesses, while the success of our cost-reduction programmes helped us deliver a 3.7 per cent reduction in adjusted costs. We now expect to deliver cost savings of around USD6 billion by the end of 2017, compared with our original target of USD4.5 billion-USD5 billion.

We continue to make strong progress in implementing our strategic actions to improve returns and gain maximum value from our international network. We are on course to complete the majority of these actions by the end of 2017 in line with our targets. And we are already beginning to see the effects: the turnaround of our Mexico business continues to accelerate; we have continued to enhance our business in Asia-Pacific, and we have extended our leadership of the offshore renminbi bond market.

We are now in a position to retire more of the capital that supported the Brazil business and will undertake a further share buy-back of up to
USD1 billion in the first half of 2017

Our strong common equity tier 1 ratio of 13.6 per cent, up from 11.9 per cent at the end of 2015, reinforces our ability to support the dividend, invest in the business and manage the continuing uncertain regulatory environment.

We completed a USD2.5 billion equity buy-back in December. We are now in a position to retire more of the capital that supported the Brazil business and will undertake a further share buy-back of up to USD1 billion in the first half of 2017, having received the appropriate regulatory clearances. This will bring the total value of shares repurchased since last August to USD3.5 billion.

We will contemplate further share buy-backs as circumstances permit, and remain confident of sustaining the annual dividend at the current level for the foreseeable future through the long-term earnings capacity of the business.

At the same time, we are anticipating and adapting to long-term social, economic and technological trends that are changing the environment we operate in.

We are responding to the adoption of rapidly evolving digital technologies by our customers by launching innovative ways to make banking faster and safer. HSBC is now the biggest financial services user of biometrics globally, and we continue to roll out voice recognition and fingerprint technology. As the world’s largest trade finance bank with more than 150 years’ experience, we are also harnessing digital technology such as blockchain to make trade finance simpler and more secure for our customers.

While digital technology presents our industry with its biggest opportunity in a generation, climate change is society’s greatest challenge. We have a responsibility to help our customers and investors raise capital to support lower-carbon, carbon-resilient activities. In 2016 we established a Sustainable Financing Unit to coordinate this work across our different business lines.

As we look ahead to the rest of 2017, we anticipate new challenges from geopolitical developments, heightened trade barriers and regulatory uncertainty. However, the changes we have made since 2011 have equipped HSBC to manage the complexity of today’s global business environment.

Most importantly, the strength of our network across 70 countries and territories gives us an unrivalled ability to help our clients navigate that same complexity and overcome their own challenges – whether investing for growth, exploring new markets or making the transition to a low-carbon economy.