HSBC reported a 17% fall in pre-tax full-year profits and shares dropped more than 6%.
The UK-listed bank reported pre-tax profits of $18.7bn last year, 17% lower than $22.6bn the previous year and well below the analyst forecast $21bn.
HSBC also announced a cut in its return on equity target from 12-15% to “greater than 10 per cent” for the next 3 to 5 years, as the bank is experiencing higher capital requirements. Top executives of HSBC have come under a huge pressure from politicians, shareholders and business leaders and were forced to give up their multimillion-pound bonuses after the bank has been accused of helping clients evade taxes.
Douglas Flint, HSBC chairman is quoted by FT saying, “We deeply regret and apologise for the conduct and compliance failures highlighted which were in contravention of our own policies as well as expectations of us.”
Additionally, Stuart Gulliver, the company’s CEO has also been accused of tax evasion. It was claimed that he hid millions of dollars in an anonymous Panama company which held a balance of $7.6m in 2007, according to the Guardian.
The bank also listed other reasons to explain the drop in profits as well as the 1.6% rise in operating costs, which were extra regulation and the need to upgrade the IT systems to handle “big data” requirements and protection against cyber-crime.
The worst performing HSBC division showed to be the global banking and markets division, with 38% profit fall. Retail banking and wealth management profits also dropped slightly. However, commercial banking and the bank’s smaller private banking arm showed a profit increase.
On Monday HSBC shares marked 607.3 at the market opening then dropped to 569.15 after profit reports, now slightly recovered to 578.6.
FTSE, also affected by HSBC share drop is now trading at 6860 from Monday’s opening 6905.
MT4 GRAPH: HSBC
MT4 GRAPH: FTSE [UK100]
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