HSBC profit in 62 per cent fall

HSBC’s profit fell by 62 per cent last year as it took a multibillion pound hit from writedowns and restructuring costs.

The UK’s biggest bank also revealed it is being investigated by the City regulator amid concerns over its anti-money laundering controls. It warned of heightened trade barriers from a protectionist US administration as well as the impact of a stronger dollar on emerging markets where it operates.

HSBC shares fell 46½p to 665¾p as it posted a 62.3 per cent drop in annual pre-tax profit to $7.1billion (£5.7billion) after plunging $3.4billion into the red in the final three months of 2016. Its revenue was down by 20 per cent at $48billion.

Its lower-than-forecast profit was affected by a $3.2billion impairment charge on its private banking business in Europe and the impact of the sale of its operations in Brazil.

The bank said the Financial Conduct Authority was probing its compliance with money laundering regulations and financial crime systems as a result of findings by a monitor installed by US authorities several years ago.

HSBC said the monitor had expressed “significant concerns” about the pace of progress, control deficiencies and instances of potential financial crime that HSBC and the US Department of Justice are reviewing further.

It added: “The monitor also found that there remain substantial challenges for HSBC to meet its goal of developing a reasonably effective and sustainable anti-money laundering and sanctions compliance programme.” Chief executive Stuart Gulliver, pictured, said HSBC was identifying “more bad actors” among its customer base as a result of higher quality internal policing: “It’s quite normal for a bank of our size and scale with 37 million customers to find among them instances of money laundering that we have self-identified or the regulator has identified.”

Gulliver said HSBC, which employs 240,000 people, had delivered a “solid” performance from all its global businesses and achieved better than expected progress on cost saving.

But he added: “We anticipate new challenges in 2017 from geopolitical developments, heightened trade barriers and regulatory uncertainty. If globalisation continues to retreat, we are in a strong position to capitalise on the regional opportunities this will present, particularly in Asia and Europe.”