News Column

HSBC Confident Despite Halved Profits in Q3

Nov. 5, 2012
hsbc

Britain's HSBC bank Monday reported a sharp drop in third-quarter pre-tax profits to 3.5 billion dollars, as it conceded that 1.5 billion dollars set aside for potential money-laundering fines in the US may not be enough.

Figures released in London showed that pre-tax profit fell to 3.5 billion dollars between July and September, compared with nearly 7.2 billion dollars in the same quarter in 2011 - a drop of 51 per cent.

However, the bank said underlying profit for the third quarter - excluding one-off provisions - almost doubled to 5 billion dollars from 2.2 billion dollars in the same quarter of 2011.

Europe's largest bank said it had set aside 800 million dollars to cover a potential fine from US regulators for alleged breaches in anti-money laundering controls in Mexico, in addition to 700 million dollars set aside earlier this year.

HSBC Group chief executive Stuart Gulliver said the bank was "actively engaged" in discussions with the US authorities to try to reach a solution. "But there is not yet an agreement."

"Indeed, the final amount of the financial penalties could be higher, possibly significantly higher, than the amount accrued," said Gulliver of the US investigation.

He said the bank had continued to make "significant" cost savings in the third quarter, by "exiting non-strategic markets and selling businesses and non-core investments."

"While subdued economic conditions persist in Europe and other Western economies, we remain confident in our outlook for growth in the emerging world and, particularly, in mainland China, where we continue to expect a soft landing," said Gulliver.

Like all major British banks, HSBC has also been hit by a scandal over the mis-selling of payment protection policies (PPI). HSBC said Monday it had set aside a further 353 million dollars to compensate claimants, taking its total bill for the scandal to 2 billion dollars.


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Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH


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