HSBC bank says annual net profit drops by 16.5 percent
AFPLONDON -- Asia-focused banking giant HSBC said on Monday that net profits sank by 16.5 percent to US$14.03 billion (10.78 billion euros) in 2012, a year in which it was rocked by a U.S. money-laundering scandal.
March 5, 2013, 2:28 pm TWN
Profit after taxation had stood at US$16.8 billion in 2011, London-headquartered HSBC said in a results statement. Pre-tax profits meanwhile fell 6 percent to US$20.65 billion.
HSBC's performance was hit by a US$1.9 billion fine to settle U.S. allegations of money laundering that were said to have helped Mexican drug cartels, terrorists and Iran.
The bank's results were also dented by a vast US$5.2 billion charge against the value of its own debt.
And it set aside an additional US$1.4 billion to cover customer redress programs in Britain. That took its total annual bill to US$4.3 billion.
However, HSBC added that its capital position improved following a string of asset sales, including its stake in Chinese insurance giant Ping An.
And bad debts — or consumer loans that have turned sour — fell to US$8.31 billion from US$12.13 billion last time around.
HSBC also revealed that its cost-cutting program had exceeded the group's targets.
Two years ago, in 2011, the bank announced a large restructuring program, including plans to save up to US$3.5 billion by 2013 and to axe 30,000 jobs globally.
However, HSBC added Monday that it generated extra savings of US$2 billion, giving an annualized total of US$3.6 billion.
“HSBC made significant progress in 2012. First and foremost, we grew our business. We increased revenues, performed well in most faster-growing markets and enjoyed a record year in commercial banking,” said chief executive Stuart Gulliver.
“We've made the business easier to manage and control by disposing of non-core businesses and surpassed our sustainable savings target.
“We also agreed a settlement with the U.S. and UK authorities in respect of our past anti-money laundering and sanctions failings.”
Gulliver will meanwhile receive a deferred annual bonus of just under 2 million pounds as part of a total package worth 7.4 million pounds. That compared with an overall figure of 8.0 million pounds in 2011.
HSBC is Europe's biggest bank by assets, was founded in Hong Kong, and sees Asia as its main market despite being headquartered in London.