anna: a big miss at hsbc. they post a pretax loss of more than $800 billion as revenue slumps. minister'sprime greatest task may lie ahead as the marital london backs and exit from the eu. sterling takes a pounding. the currency drops the most in a month -- as investors have priced in the uncertainty to come. manus: you are welcome to "countdown" this monday morning.

anna: welcome to the program. it has just gone 6:00 in the morning here in london. focus is going to be on the question of exit -- of brexit, the future of the u.k. nervousness over the weekend of how weak the pound would be. the mayor of london decided he was going to back calls for a brexit. moody's saying that it would be credit negative for the u.k. a lot of volatility in the currency markets. manus: the brexit campaign, will it be a campaign of fear? euro sterling trading at 77.78. lovely one. this this is about volatility taking back to the u.k. election in 2015. we were way above that level. the volatility is high. what it will be in six months

time is rocking higher. strategists say that dollar sterling will go to 1.4080. the short positions in the marketplace. the least bearish on sterling since january 12. anna: let's talk about what boris johnson has said, the waves he created over the weekend when he announced that he wants to back a brexit. this comes from his article in "the telegraph." "there is only one way to get the change we need --" it raises the question as to whether he wants a brexit or whether he thinks that this vote would be a way to get some sort of other aim. he is the most likely candidate to be the next leader of the tory party. another widely-red paper here in the u.k. -- that is the

blockbuster headline from "the sun." saying he is now on the wrong side of history. a lot to play for in terms of maneuvering our opinion. are you in the 19% of undecided? do you believe cameron or do you believe bo-jo? mr. johnson? anna: let's get the first news now. surpriseas reported a or scored her pretax loss of $858 million. estimates had been for a $1.95 billion profit. their ceo had been accelerating plans to scale back, seeking to boost profitability and reversed a share slump this year. the pound has on the most in a month against the dollar after boris johnson said he will campaign for britain to lead the european union. -- to leave the european union.

reversing a gain made on friday when david cameron secured a deal with eu leaders in brussels. he said a june 23 date for the referendum. oil is on the rise after russia said talks should be done by march. nigeria is backing saudi arabia and russia's decision to freeze production. africa's biggest producer says iran and iraq should be given some room to win back market share. bombings in syria have killed at least 140 people. that came as the u.s. said russia agreed to the terms of a limited cease-fire. islamic state said it carried out the attacks in the southern suburb of damascus. china stocks have risen to the highest in a month on speculation the new securities regulator chairman will take steps to use the world's second-largest equity markets. his predecessor was criticized for mismanagement that helped

deepen last year's rout. global news 24 hours a day, powered by 2400 and more than 150 news bureaus around the world. manus: let's check in on the asian market session. aidi: a very good day to you guys. we had asian markets reversing direction after quite a volatile start to the trading day. we are seeing gains building on the rally we had recently. this is being led by japanese markets. the nikkei closing up by a must 1%. also seeing gains on the day. a bit of a respite for the yen, under pressure with three weeks of gains. a littlee yen weakened bit, so that the pressure off of exporters in particular. strong gains coming out of the mainland market. shanghai up by 2%. we are seeing those gains being

driven in the property sector in particular. that the newpes head could placate the market. of course, he was removed from his post in dramatic rest -- fashion on friday. we are seeing a relief rally on the back of that development. property developers. the government announced it would be cutting tax on certain transactions. we are seeing very strong gains from the likes of greenland. we are also seeing that being tracked through property developers in hong kong as well. we did see losses across the energy space despite the renowned for oil above $30. not much has changed in terms of what we are seeing in those names in particular. iron ore miners, prices have started to climb again. the chinese steel mills restocking after the lunar new year holiday. that has boosted prices to the

highest since october. fortis q climbing close to 10% today. earnings outetting of a number of these big iron ore miners later on this week. on the, i want to touch stock of the morning for you guys, hsbc. it is pretty evident. we had that drop come through when the earnings came out about midday and continuing to take that leg down as well. it is down about 1.8% on the day. toing a look at that year date number, it is off by over 20%. performance is broadly satisfactory, investors in hong kong not feeling quite the same way. thank you very much. china trading higher, then be after months, the battle for the

brexit comes home. the greatest target may lie ahead for david cameron. he wasted no time in beginning his campaign to stay within the eu. >> i think what is best for britain is staying in the reformed european union because we will be better off safeguarding opposition in the massive market we have in europe . i think we will be stronger in the world, being able to get things done. that is making sure our country is safe and our people is safe. i think we will be safer inside the eu because we are able to work with our partners. meanwhile, boris johnson has thrown his before that his support behind a british exit. -- ther a huge amount of last thing i want was to get david cameron or the government.

if there is anything else i can do, i will be advocating to leave. want a better deal for the people of this country. to save them money and to take back control. anna: so he is taking back control. manus: he is scrubbing up. of course, he is the mayor of london. anna: let's bring in charlie, head of rates. he joins us in the studio. good to see you this morning. give us your thoughts on the weekends development. assets as au.k. result of the uncertainty. charlie: that is the key word, uncertainty. we have plenty of examples recently of how opinion polls and the view on anything such as

the scottish referendum can be misleading and can change quite a lot in the whole process. we have a three-month run, which is quite a long period. by the time we get to june 23, we will probably be sick of the word exit, i would -- brexit, i would imagine. the uncertainty is going to weigh on assets. you pointed out the volatility. that shows you how much he is already being priced in terms of the weakness and the caution in the markets. the thing is, we going to be trading opinion polls. going to be trading this headline versus that headline in the next three months. longer-term,s, there are very big implications if there is a vote to leave. the economic cost, according to all economic theory, would most likely be substantial. markets, welk about

have had a quick look at sterling. here is what it has done over the past three months. my question to you, going across the asset class, we talk about the gilt market and equity markets. there are other formats at play terms of driving this. the euro up by 11%. there are many elements driving sterling. do you think brexit trumps everything? i don't. it is a three-month rally. that is a long time. if we get a clear trend emerging in opinion polls, the market will start to price in that outcome. you highlighted the moves against the yen and the euro. and a lot of that has to do with the broader risk outlook we have had. and has been a challenge sterling has had its own idiosyncratic cores -- cause for

concern. has seen it weaken against these other currencies. if we see a clear move in the opinion polls, you will start to see sterling recover strongly. brexitoody's says that would be credit negative for the u.k. this comesan, again, back to what would be the implications? we do not know exactly what would happen. hence my emphasis on the word uncertainty. we cannot say exactly what the economic impact would be on the u.k., but it is unlikely to be great news. that means that the bank of england is unlikely to raise rates. themything, we could see remain on hold for a long time or even go into negative rates if the impact on the economy was that severe. from the other point of view, there is a current account deficit in this country. if we have a lot of uncertainty

and the currency remains weak, we might have funding issues read we might see the curve stephen. -- steepen. if you start to move towards a positive outcome for the brexit, all of this will flip into reverse. it makes it very difficult at this point in time. manus: you have probably swallowed as much press as we have over the weekend. really pushed by one of the main interviewers. his cabinet is divided. we have heard from the mayor of london, boris johnson. how do you think this campaign is going to be fought. is it going to be fought on the fear of economic insecurity? won some concessions, but he seems to be blinded by

migration. charlie: one would hope that people vote on a pragmatic basis. if people vote on some side i would other matter, hope that the british population is more intelligent than that and they will vote on what they are supposed to be voting on, which is this reform to the eu package. if they do not vote on that, that is a problem. think the british public is quite pragmatic and i would assume they will vote on what they want to vote on. anna: it will be interesting to see how the politicians involved tried to put distance between that and the other issues that are circulating around this. thank you very much. charlie stays with us. withll be talking brexit the u.k. foreign secretary right here on "countdown." manus: today is pmi day across the world. france, germany, the eurozone,

and the usa. anna: and bank of england governor mark carney testifies on the economic policy outlook. that could be interesting. we will also hear from the saudi arabia and oil minister, whose the in houston, texas. friday, it is -- anna: cpi data in europe. plus ireland polls, the general election, and bankers convening in shanghai. so much. up next, a surprise missed by europe's largest bank. we are live to hsbc's hq for more. ♪

anna: welcome back. this is "countdown." let's get the bloomberg business flash. >> the billionaire owner of arcadia group says he is

uncertain about what might happen with britain's teacher in europe. he spoke to francine lacqua at london fashion week. >> again, as i said, most of our business in europe is online. i am hopeful that that is fine. let's wait and see. take a position on whether we should leave the eu or not? >> i don't want to get into politics. retail is hard enough. blackrock is bullish on japanese shares even after this years equity rout sent the topix into a bear market. the oj decision on negative interest rates punished banking shares. blackrock says that will hold down the yen and help boost or bring earnings. cutworld's 12 biggest banks

staff by 5% in 2015 according to a report by a research group. it extends the trend that these banks reduced foreign-exchange headcounts by more than a quarter since 2010. europe's largest bank, hsbc, reported a surprise fourth-quarter pretax loss of $858 million. estimates had been for $1.95 billion profit. they have plans to scale down their vast local footprint, seeking to reverse to profitability. much. thank you very let's get more on hsbc. hq.lind chin is at their run us through the numbers. and is about loan losses that is what is concerning the market. rosalind: certainly, this pretax loss was a bit of a surprise.

year, when they made a profit of $1.7 billion. estimates of a $1.9 billion profit. look at the operating costs. $11.5 billion in the fourth quarter. for the full year, the bank reported pretax profit coming in at $18.9 million. that is a difference of 1%. over $20 were for billion. the numbers have been surprising all around. was 7.6%n on equity against estimates of 84%. for the full year, it does not seem to be a loss in terms of the pretax profits. is thethe main issues bank took an income hit in terms of lending. 18%.by

loans --- bad loans. meant that together the full-year charges were $3.7 billion. that thehas said group's financial performance was what they call broadly satisfactory. that is coming from the chairman. shares reversed as the results came out today. anna: what about the role of asia? this is a bank that, for many months, was tussling with where take orders would be. we already know they are going to stick with london. what about the role of asia and the numbers and the strategy? : asia still contributes

a huge amount to hsbc. the results said that asia remain central to their strategy. 50% of adjusted profit before tax. they mentioned that a just -- asia continues to be at the forefront for hsbc. anna: thank you. rosalind chin joining us from hong kong. manus: charlie is still with us. story is perhaps a great example of no loss provisions, asia exposure. if we talk about the banking industry in general, it does fall into your work because it is all about bonds, credit default swaps, various tiers of debt. that comes home to roost in the rates market very squarely. have we passed the eye of the

storm in terms of being worried about banks? are we overly worried about banks? everyone has said, look, stop this panic. there is enough liquidity. we are all in a mass hysteria over banking. think whereean, i the cause of concern is coming from is a macro story. it is global growth and the fact that you are not seeing the traction from policy makers you would have normally expected. does that mean the eu should be really concerned about the banking sector? probably not. probably, the fears have been overdone the the reality is that we have not seen the macro followthrough to really start to see the banking sector and credit channels start to work properly, as we would have normally expected. normally, post financial crisis, you would have expected by now for the banking sector and the recovery and the normal credit

cycle to be going gangbusters. anna: we talked with hsbc and they talked about how the capital and regulatory environment has become there are. -- clearer. charlie: regulatory pressure on banks in the financial sector, as a whole, has been one of the clear impediments to the normal sort of lending and credit cycles. do negative rates help? i know we have not got them in the u.k., but elsewhere in europe. do they help when banks are trying to build their capital to live up to increasing expectations regulators? charlie: it depends on how they are structured. as always, the answer is, it depends. going look at how it is over in japan, the banking sector has not been too adversely affected by negative rates. there is a tearing system. that was also in place in

switzerland. --h have allowed the banks they were not subject to the full force of negative rates. environmentlatory is a key aspect going forward. you are going to put too many shackles on the ability for banks to do business. they provide the leverage. manus: they do, indeed. we will get into this perhaps after the break. the chairman said he would take steps to mitigate the effect on banks in terms of negative rates. up next, we are going to talk sterling. brexitohnson is on the campaign. eua: we look ahead to june's referendum. i wonder how may times we will use that term, sterling the

takes a pounding. u.s. futures, let's check in. a little bit of a rally is on the way. it is a risk-on day in the equity markets. ♪

rosalind: -- manus: let's get the bloomberg's first word news with nejra cehic. nejra: hsbc has reported a pretaxe three-quarter loss. estimates have been for a profit. the ceo has been accelerating plans to scale back the vast global footprint seeking to boost profitability. in pound has fallen the most a month against the dollar as boris johnson said he will campaign for britain to leave the european union. sterling dropped below all of its 16 major peers reversing again on friday when david

cameron secured a deal on membership terms with eu leaders in brussels. oil is on the rise after russia freezelks on an output should be done by march. africa's biggest producer says that iran and iraq should be given room to win back market share. suicide bombings in syria have killed at least 140 people. the islamic state said it carried out the attacks in the southern suburb of damascus in a mainly shiite area of the province. chinese stocks every as and highest in a month on speculation that the chairman will take steps to boost the world's second-largest equity market. he was criticized for mismanagement that ruffled investors and deepened the gap

from last year. you have been keeping an eye on the markets and we have been talking about brexit and the pound. nejra: it is for the pound this morning. if you look here you can see this gain that sterling made against the dollar which is after cameron secured that deal with eu leaders in brussels. that gain was short lived because when the market reopened, it reopened lower. we've seen the pound fall the most in a month against the dollar. saids after boris johnson he will campaign for britain to leave the eu friday's has undone gains and we could be in for a lot more volatility. this is six months of implied volatility at a 2011 high.

it stayed up there at the moment, although david cameron announced the tidings -- timing for that referendum which has become a certainty. there is a lot more concerned about britain's place in the eu and the pound is actually weaker against all of its g 10 peers. that is looking at what the pound has been doing. manus: the market is up over 2%. japanese stocks are rallying. what are you making of the moves? nejra: we are seeing asian stocks gain in general. we have seen chinese stocks rise the most this month and that is on this regulator reshuffle. the chinese securities regular

has a new head. we are really focused on last years slump. the previous securities head was criticized for mismanagement. we have had this reshuffle and we have seen the stocks gain on that. this reshuffle comes ahead of next week's meeting to set out a new five-year economic plan. we're also seeing gains in brent losses that we saw over the previous days. but at the moment those gains are not so big. that has happened is russia said the talks on an output freeze will be done by march 1. back to you guys. manus: we have been discussing ejra has beenn taking us through some of the moves.

mayor of london boris johnson said he will campaign for a kind of exit. now bloomberg's jones hayden. how confident are the other eu leaders that cameron will be able to win the june 23 referendum? what is the feeling in brussels? they would be more confident if morris were on their side at this point. that was a little surprised over the weekend. they think that they got a good deal on friday after these .ntense marathon negotiations cameron came away with basically what he wanted from the other eu leaders. ofre was a lot back-and-forth and they went into the night thursday and friday but they ended up coming up with an agreement, with a deal that cameron will be able to take to the people. and i think hollande and others

is confident he will be able to sell it to the people in the next four months, in the run-up to the referendum. marketwhen it comes to representation witnessing a little bit in sterling and euro-sterling, to what extent would brussels be concerned about a negative impact in the market? one or two of the tweets sent out on friday had naivete in the extreme which were a deal done. they had no concept of what will happen between now and when this country goes to the polls. >> the market volatility is a concern but as you can see the pound was up on friday. because they got a deal and now it is down today because of boris's move but the volatility is one of the things that leaders are looking at in terms of knowing that everybody is focusing on this issue.

important thing for the u.k. and the eu and beyond because it affects the relationships across the globe if the u.k. were to vote to leave the eu. i think that u.k. business in general is behind keeping the u.k. in the eu. so brussels in general is optimistic. there optimistic that cameron off.be able to pull this >> let's bring back in charlie. the euro -- the rest of europe will be watching keenly what happens. in the meantime they have an economy to run and negative interest rates. we are to get those pmi numbers today in the eurozone as a whole are all going to be above 50 and yet we are talking about

expansion territory. >> i think it is largely to do with one of the targets which is primarily inflation which continues to hit the runway. you have a nice five-year breakeven chart their. manus: this is draghi's preferred measure. he is on his knees. >> that is not close to 2%, shall we say? that is their preferred policy metric. pmi's arehe reasonable, they are not getting the traction that they would have expected. we are talking about the banking sector and the normal credit cycle. anemic -- is so manus: talk to me about negative rates.

the whole purpose of negative rates is to drive velocity and use of money. we need to take steps to mitigate the effect on banks in terms of negative rates. does that not simply undo everything that they told us that negative rates were supposed to do? >> it is about the excess reserves effectively. japan, onlyave in part of the current account holdings can chart negative rates. thoseea is to force holdings out into the assets to stimulate the economy. it sounds like a similar thing will be considered by the ecb. if you moved it too negative a rate it is very damaging to bank profitability and then you

should yourself in the foot. craftthere is a way to the requirements it doesn't weigh on bank profitability? >> exactly. this was to the same thing. >> asian him x quoted in one of our articles this morning. jim wilco who has a good track record is talking about a recession in the u.s.. he is talking about 10 year yields. he thinks half a percent by 2017. people think that is low. is it possible? >> anything is possible. based on what we are seeing now it seems unlikely. although there are parts of the u.s. recovery that are disappointing, things like job creation are pretty good.

that is traditionally a good thing and you're starting to see a little bit of inflationary pressure, albeit from a low base. this point ine at time that unless there is a huge economy may not do spectacularly but should trend long. manus: you mention inflation in the united states and it did .ome in higher the market is moving and this is showsrk function and this the possibility of a rate hike. from 11% and we are now back up sub 35. we are nearly into the 40's by the end of the year.

>> which is already a long way from the fed. that is one of the things people are thinking we may see at the fomc meeting. four rateeries of hikes priced in for 2016. the market is pricing one hike maybe by the end of the year. there is a big disconnect between what they say they could do and what they intend to do. them coalesce and find the market being slightly more pessimistic. anna: we will focus on those dots no doubt in march. the mobile world congress kicks off in barcelona today with more than 90,000 delegates swearing to see the latest .evices and technology >> this one is taking place amid

fears of a smartphone slowdown and privacy. caroline, you have been speaking with the biggest companies, are they worried about the slowdown? >> they are. the cash being slashed in the most amazing stand. of course we had the big fanfare. yesterday the biggest extravaganza i'd ever seen. three or 60 cameras. every spoken to not one but two the biggest smartphone makers in the entire world. samsung are worried and are noting this slowdown. . >> the market for the smartphone is slowing down a bit. a phonemore than just

that you are holding your hand. when using one of these new devices this is more. this is your camera your mp3 three -- tv, recorder. this is everything and more is coming. and withinre healthy two to three years we can be the top two. in five years we have a chance .o be number one >> there you heard from not only samsung but richard hugh. here is the ceo of the consumer device unit. they are the biggest player in china but the third biggest in the world. most of them say that smartphone sales are slimming down. there talking about extreme

conditions. no wonder you sing samsung not unveil the latest ones currently. there also unveiling cameras, newual reality going for a smartphone tablet. these copies are worried and they have to unveil new more innovative products. they're trying to sell things nowadays. we will stick with london. it's london fashion week. we speak to them best known for the iconic motorcycle jacket. is the eu in or out?

♪

anna: welcome back, let's get the bloomberg business flash. europe's largest bank has

reported a surprise pretax loss of $858 million. for 1.5 9had been billion dollar profit. the ceo had been accelerating plans to scale back the vast global footprint seeking to boost profitability and reverse a share slump this year. the world's 12 a guest banks cut -- 12 biggest banks cut staff. a trend that sees banks reduce for exchange headcount by more than a quarter since 2010. yuji international has agreed to buy swiss bank. they're valued at 1.3 3 billion swiss francs. the billionaire founder was arrested amid a corruption investigation and released from jail to remain under house arrest. .e has denied any wrongdoing

that is your bloomberg business flash. manus: no disasters and note fireworks. that is philip green's assessment of his business, arcadia group which is the parent company of top men in top shop. >> it is ok. obviously some bits are better than others. well. is doing is it picking up? >> we go slow to develop buildings. generally, no disasters or fireworks. retail is probably softer. in the mix, it is ok. overall, how many expansion

plans? >> we have a lot of things going on. we are launching a new athletic rent. -- brand. .e will announce next week asia compared to the u.s.? no fireworks, nothing terrible? asia.are not heavily in i think now, at the high end we're a little overexposed? everyone saw that real estate another one to come out. i think it would be a good time to go in when they want to come out. >> overall, you seem like a lot of world leaders and ceo say it is not that bad and not that great. are you worried about a recession at all? we could spend an hour

talking about all of the things going on in the world. you just don't know all of the different effects. whether it is the american election or the european debate. you have to take it all in. i think that we run a pretty tight ship and have a good formula. is west important thing are on top of our inventory. we know how to run it well. customer city what to buy new and new. so looking how we can be even .harper faster and quicker >> on brexit or the referendum, does that impact? you must have a plan b. >> most of our business in europe at the moment is online. fine.opeful so that is

staffnot have big exposure in europe, but let's wait and see. let's stay with fashion we can bring in another british brand. they have relocated some of their operations back to britain . we are joined by the ceo who is sitting right next to us. we heard from philip green there. he was saying he doesn't want to say too much about exit. what is your view on this hot topic? >> it would nice despina to see the politicians and play for britain. it's possible if there was a brexit that there may -- that .here may be convocations

my biggest concern is the five years of unwinding agreements will stop but clearly what we have to do is control we had -- can control it is a small agile business we would never go through that. manus: you are expanding. talk to me about china. everything is fascinating how they are buying. what is the biggest trend that you can give us insight to. >> it's properly europe and the usa. the u.k. is a big piece of that at the moment. that china is a volatile market. where looking more to japan and korea. we think there are markets more suited to us and more stable that have more opportunity for us. that's where our focus is right now. anna: so where are you sing strength and weakness? i don't know how much you see

any big macro trends but what are the areas of strength for you? in the u.k., europe and the u.s.? just brought the company back to the u.k. and have a real focus on that. anna: that is not manufacturing though. x that is the commercial side. with open two new stores. it's very important for us and europe is very strong. germany is showing a lot of strength. a market that is a little softer is the u.s.. with the asia expansion that's really balancing the business. manus: you have these collaborations with beckham. talked was that the correlation between the cost of these relationships and volume. >> we want to reach out and

build a new franchise and build awareness. great association with david beckham. dissociation with live tyler who personified -- percent of suck -- personifies the brand that we stand for. the shortcut to signify what we stand for for a bell staff woman. anna: some of the other brands you work with -- it's a luxury brand but is it a very different experience? do you bring something different? >> what you learn from high-end luxury background is that heritage is very important to a real luxury brand. the product is very important. the quality and craft is equally the same. it is about brand spirit and a brand universe as well. hage, the ceo at

bell staff. over thebritain splits issue of europe we get the opposition view. we will also be talking to the bank of ireland. ♪

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manus: a big miss at hsbc. they posted a quarterly pretax loss of more than $100 million as revenue slumps. battle comesxit home. the prime ministers greatest task may lie ahead. manus: sterling takes a pounding. the company drops the most in a month. anna: looking to countdown, i am

an edwards. manus: i am -- i am anna edwards. manus: i am manus cranny. dollar-sterling is where the pressure is. volatility is rising. as boris joins the brexit bandwagon. anna: nervousness in the market surrounding that split in the conservative party. manus: will get a nice bounce in equity. i think that the u.k. story is almost idiosyncratic, whatever sterling volatility you have. but you have money coming out of the yen. got the rise of a half percent in london.

you are seeing the shanghai market ramp up a little bit higher despite those nerves. anna: a little bit of money coming up from a bee foods. this is the diverse bit of business. they're talking about their number sing that half of their adjusted eps is expected to be slightly lower. they were saying that the underlying trading outlook would be unchanged. manus: are going to talk to them very shortly but the underlying pretax profit comes in at 1.2 billion euros. roseet interest margin eight basis points. they say a gradual rise in the dividend ratio toward nevada which is 15% payout ratio. anna: we will be speaking to the ceo in a few minutes time. never change is standing by with

the details. has fallen thed most in a month after the london mayor boris johnson said he will campaign for britain to leave the european union. sterling dropped against all of its 16 major peers when prime minister david cameron secured a deal with eu membership. china stocks have risen to the highest in a month on speculation that the new securities regular chairman will take steps to boost the second-largest equity market. he was criticized for mismanagement that rattled investors and helped deepened the last year's $5 trillion route. hsbc has reported a surprise loss. estimates have been for a 1.5 billion dollar profit. gulliver has been accelerating plans to scale back, seeping -- seeking to boost rough and

ability and reverse ace -- reverse a share slump this year. manus: let's get a little bit more on the story. rosalind is standing by in hong kong. take us to the numbers. there are parts hit by bad loans to oil and gas companies but let's go to the numbers. ofre was a surprising loss $858 million compared with last year. that came as a surprise because analysts had been expecting profits of $1.95 billion. profits came in at $18.9 billion. that was a bit of a surprise

because estimates have been for $21.7 million which really shows an increase of 1%. it had been at 7.3% in 2014. estimates were for 8.4%. they are missing estimates in several areas. the bad loans given to oil and gas copies really contributed to a hit. in increase of 32% on bad loans and credit risk divisions. the income was hit by a fall in income from lending. also there was a hit on expenses , losses on hedging.

the dividend was pretty much in line with estimates. but for the first quarter, $.10 only. mentioned some of the concerns for the oil and gas sector. in that loan impairment charges increased 17% across many geographies, what about the role of asia? what do they have to say a but the strength and weakness in china in particular? in june last year, they outlined strategies. they outlined a pivot to asia, to look for asia to growth. it should come as no surprise that they have been having a few woes of late. the chairman said that china's lower economic growth will undoubtedly contribute to a bumpier financial environment

that is still expected to be the biggest contributor. business in asia contributed more than 70% of adjusted profits before tax. manus: thank you very much for the details. anna: seven minutes past 8:00 in barcelona. the world's biggest smartphone maker unveiling their biggest offering. with the market slowing down, s?at are the issue manus: caroline, you have a special guest. caroline: i do, indeed. the chief executive of the biggest network in europe. thank you for joining us today. first of all, you are in 50 countries in europe. how is that affecting your business? are people upgrading less or are

you still seeing economic sentiment growing? >> this industry is very exciting. in principle, our industry is growing from a demand perspective. the issue in the past was we had a lot of regulation. there is a public interest going lower and lower but we have a trend now in policymaker mindsets. there more adjusted in getting in high been to services. we look very positive into the future. are market's business is going by more than 10%, year over year. we are in better shape than we were in the party. caroline: you have the infrastructure of money and investment. we are seeing a lot of m&a consolidation within the industry but are regulators

happy to see that consolidation? have an infrastructure it's like flying with big airlines over the ocean. the better the utilization of the network, the better and more companies can invest. this is what happened in europe where we have more than 150 telecommunications companies. in the u.s. reveille four companies and in china only three. the conversation that europe has started is more intra-market. four to three operators and piercing even more happening in europe. it to the economics of our industry will see more coming over the next year. caroline: and it is a good thing? >> i think it is a good thing for customers. the better the integration, the better prices you can offer consumers as well. in denmark a merger was not improved and since then the prices are going up.

it's like oil industries, the better the prices. caroline: what about where you are pricing more competition because you see vodafone launching a new global's unit. is that an issue when you are seeing less competition? >> we love come petition. we have a great network and the netherlands. infrastructureng across the country which is totally empty so we can offer something like we have offered in the u.s.. we have the opportunity to consider other deals in the netherlands. i am looking forward to it. caroline: you are considering a deal in the netherlands? >> no. caroline: you are not going to sell off your assets? >> we are not planning to sell them off right now. caroline: you have quite a significant stake in the btee

deal in inland. is that some -- england. is that something you would be interested in? strongest and most powerful tech side company. somethingwe have where we are ahead of the trend. the integration is alive in europe. so this is now coming to life in the u.k.. i'm sure the accommodation will be very good for the customers. they could experience data everywhere. caroline: what about enterprise? we are seeing other companies availing more hardware from a network perspective. are you focused more on the enterprise user? caroline: absolutely.

the example i gave on the airline, you need business class . you need one for our industry and most of the countries where we operate have a very strong business class and here, we are showing new products to simplify that a bit. for businesst else customers. caroline: does that drive down service revenue? what has that done to consumer business? >> it is not about price. it is security, trust, convenience on a global scale. this is what we offer with the ip services. caroline: and security? what do you think of the ongoing debate in apple? do you support privacy company saying they should protect consumer data? >> it's all about one thing. we need more bandwidth,

higher-speed in the infrastructure and on top of that we need real-time networks. so the response time must become faster and that is what but you telecom sends for. we are competent in technology when it comes to the network but it only works if it is secure. trust is the basis for whatever happens. topic.y is a big we have more than 2000 people in one organization. where we bundle all in initiatives. this is a new service which we bring in all of this infrastructure. >> do you support apple? i support apple. we have to care about the intimacy and privacy of our customers. this is the basis for a business in the basis for using this data. >> great to speak to you.

a key player in the biggest european network. .ack to you in london anna: up next, we speak to the afterf ireland's ceo pretax revenue loss of 30%. ♪

manus: it is 7:70 in london. eight 117 in frankfurt. richie joins us on the phone from dublin. great to have you with us. great set of numbers. the underlying profit up percent. improving,t margins loans dropping. your stand out from the rhetoric , my question is, what can unseat any of this good news? at rpt, we are lending into a

growing recovery. we had the export sector leading it for quite a while but domestic consumption is him -- consumptionism is begin to pick up. earnings levels are coming up so we have consumer confidence. we have a very diversified business in ireland. of your overall business i understand that half of your loan book is in the u.k.. what are the implications of brexit? about 40% of our assets in the u.k. and 45% of our earnings. important to understand our business model which is a consumer oriented bank. we have very good partnerships. what we do is we work with the partners and use their infrastructure, membership, and brand names. our upfront financial membership

is relatively low. orientatedsumer business. the capital is in sterling and the funding is in sterling. what we see for our irish customers is exchange rate volatility. the fact that the data has been set takes away some of that uncertainty. they're looking for products that we can provide and that gives an income stream. said 40% of business done in the u.k., that sterling exposure -- is it something you are hedging? are you taking opportunities to mitigate that risk? of 79 on eurolls sterling. what is your plan to deal with that? and funding is in sterling but we do not hedge the profits. that's one of our policies. we have some exposure to volatility.

ru contingency planning more generally around the possibility of a brexit? would you consider separating out in some way? how far does your contingency planning go? >> during the financial crisis as we looked at our business is going forward in the business we're in, our u.k. business is in a separately capitalized, separately funded subsidiary which is regulated by it. it's a standalone business in that respect. manus: in an extreme case, would you ip a that business -- ipo that business? >> we look at a range of models. we have done all sorts of stress tests and our business model in capital and funding are a busted but we believe that britain is a good place to do business.

we have very strong relationships with our partners. so we are comfortable to do business and to have the relationships that we have in the u.k. our financial risk is obviously low. anna: can i ask you a bit about the irish political situation? as we approached the elections at the end of this week, opinion pulsate they may fail to win an overall -- an opinion poll says they may fail to win an overall majority. does that concern you? >> we have a broad agreement across the political spectrum about the necessity of keeping the growth in the economy growing. the growth is coming from exports, fromm investment. that is going right across the economy. we have been around over 200 years and we always seek to have a professional relationship with

politicians. speaking of politicians and professional relationships, your probability is up over 30%. talk to me about remuneration within the bank of ireland. will the bonus still expand, will you see an uplift? who within it will benefit. >> what we have done there are still restrictions on bonuses. we just done a deal with our main trade union where we've agreed that the pay run for 2016 and 2017 within a two-year deal which would result in pay increases of between 2% and 2.6% depending on individual performance. manus: thank you very much, richie. the ceo at bank of ireland. anna: after months on the

continent, the battle over brexit has come home. it seems that the greatest task may still lie ahead. he wasted no time in staying within the eu before a referendum now scheduled for june 23. >> what is best for britain is staying in a reformed european union. it -- we will be able to get things done whether that is making sure our country is safe or people are safe and i think the fight terrorism and criminality better. we will be safer because we are able to work with our partners. manus: meanwhile, they won an early victory as the london -- london mayor defied cameron by pledging his support behind it wish exit. >> last -- behind a british exit. >> the last thing i wanted was

to go behind david cameron or the government. advocating -- because i want a better deal for the people of this country. to save them money and to take back control. anna: june 23 is the big day when britain will vote on whether to stay in the european union. labor has remained pretty united about wanting to stay in. let's speak to a senior military figure. thank you for joining us. i was reading with interest forced johnson's column where he said that we will hear a lot of bad news about the economy, things it could happen to the u.k. economy if we were to vote for a brexit. but his view is that is overdone. is any of that persuasive?

do you go along with his thinking on any of these issues? >> good day. i think that boris johnson is ron and i thought one of the things that was interesting was that he acknowledged that there are potential risks. this is a very big decision for the british people. it is much bigger than the drama and argument within the conservative party because we have one choice here. we are either going to remain in the european union or we are going to leave. a better deal is nonsense because this is for keeps. the overwhelmingly strong argument is this, it has given us jobs, investment, and growth. about half of our experts go to this large single market. .t helps enhance our security

adderley tackle climate change and overcome poverty in the developing world. manus: we appreciate all of that, but what you want to get to is an understanding of what cameron has come back with and he must sell to the country and the rub of it is that the exit campaign would say he has not any back sufficiently with kind of sovereignty or return of sovereignty and he goes on to say between 15% and 50% of the u.k. cannot come back without the eu agreeing to it. >> the reason i was making the point -- you say that we know that but that is what this referendum is going to be about. this is not a referendum on the deal that he has negotiated because from the labour party's point of view we were in favor of remaining in that european union before this started and we are still in favor.

because of these much bigger issues. anna: thank you so much for joining us. hillary then, the uk's -- hillary benn, the u.k. or and secretary -- foreign secretary. ♪

got -- guy:, welcome to "on the move. we're counting you down to the european open. here is what we're watching. pound sinks the most in a month versus the dollar as the london mayor boris johnson says he will campaign for a your -- you can't exit from the european union. bank postedst quarterly pretax loss of $800 million as revenue