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

The Pak Banker - - Front Page -


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. —

VI­EN­TIANE: Prime Min­is­ter Raja Pervez Ashraf with 46 Heads of States and global lead­ers who par­tic­i­pated in Asia Europe Meet­ing (ASEM's) 9th Sum­mit.

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