HSBC 3rd-quarter profits slump on charges
Profits slumped after taking $1.15bn in extra charges for a money-laundering scandal in the US and insurance mis-selling claims in Britain
HSBC said on Monday that third-quarter profits slumped after taking $1.15 billion (€898 million) in extra charges for a money-laundering scandal in the US and insurance mis-selling claims in Britain.
Net profits tumbled by more than half to $2.498 billion in the third quarter or three months to September, compared with $5.222 billion a year earlier, HSBC said in a results statement.
Britain’s biggest bank revealed that it has set aside another $800 million to cover fines from US authorities for failing to apply antimoney laundering rules, taking its total bill to $1.5 billion.
The lender also took another charge of $353 million to compensate clients who were mis-sold payment protection insurance, in a scandal which has blighted British banks.
“The third quarter results include an additional provision of $800 million in relation to the ongoing US anti-money laundering, Bank Secrecy Act and Office of Foreign Assets Control investigations,” said HSBC chief executive Stuart Gulliver. “We are actively engaged in discussions with US authorities to try to reach a resolution, but there is not yet an agreement. The US authorities have substantial discretion in deciding exactly how to resolve this matter.
“Indeed, the final amount of the financial penalties could be higher, possibly significantly higher, than the amount accrued.
“We have also made UK customer redress provisions of $353 million, mainly in respect of Payment Protection Insurance.”
HSBC was thrown into crisis earlier this year when a US Senate report found that it had allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls. Lawmakers said money laundered through HSBC-linked accounts benefited Mexican drug lords and terrorist networks, and skirted US sanctions on Iran.
The Asia-focused lender added on Monday that pre-tax earnings slumped 51 per cent to $3.5 billion, as the group’s performance was also hit by a large fluctation in the value of its own debt.
However, after stripping out exceptional items, underlying pretax profits more than doubled to $5.0 billion in the third quarter, aided by a strong performance at its investment banking division, and easing eurozone market conditions.
Total revenues meanwhile soared by 20 per cent to $ 16.13 billion in the reporting period. —
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