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Shows & Panels
HSBC profit drops after money laundering fine
Monday - 3/4/2013, 9:20am EST
LONDON (AP) -- The HSBC banking group said Monday its net profit dropped 17 percent in 2012, when it had to pay a hefty U.S. fine to settle money-laundering claims. But earnings remained robust at $13.5 billion as Asian businesses performed well.
HSBC paid nearly $2 billion last year to settle a money-laundering case brought by U.S. officials that dealt with illicit drug money from Mexico. It paid another $1.4 billion fine in the U.K. for improperly selling financial products to customers and also wrote down the value of its own debt by $5.2 billion.
Investors were disappointed by the figures, sending the company's shares down nearly 3 percent to 7.06 pounds in early trading in London.
The bank noted that not counting one-time charges, its "underlying profit" before tax rose 18 percent to $16.4 billion, as it had to write off fewer bad loans. That suggests it is being hurt less by the economic downturn that has hit its European and U.S. units in recent years.
Chief Executive Stuart Gulliver said the bank has made important progress in focusing on its more profitable businesses and reducing costs. HSBC has cut staff by about 10 percent.
"In terms of the broader strategy that we set out in 2011, we've delivered most of what we promised," he said in a statement. "We have made HSBC easier to manage and control by disposing of non-core businesses."
The bank, which showed substantial growth in its commercial and retail departments, increased its dividend payout by 10 percent for the full year compared with 2011.
Joe Rundle, head of trading at ETX Capital, said the decline in the company's share price on Monday is likely to be brief now that the bank has dealt with the difficult issues of job cuts and regulatory fines.
"With these penalties now settled and out of the way, a major overhang on the stock price has been removed," he said.
The global banking group earns roughly 90 percent of its revenue outside of Britain and has done well in growing Asian markets.
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