HSBC shares rise as group reports fall in profits during the first half of 2014

4th August 2014

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HSBC shares have firmed 3% despite the bank reporting that pre-tax profits dropped by 12% in the first six months of the year.

The bank which serves some 52 million customers in its market update today announced that profits before tax came in at $12.3bn (£7bn) down from $14.07 (£8.36bn) a year earlier.

By 11.18am, stock in the firm has risen 17p, or 3%, to 646.5p. The business highlighted regulatory pressure as a drag on performance.

HSBC group chairman Douglas Flint, said the demands being placed on the “human capital of the firm” and on its operational and systems capabilities “are unprecedented”.

He added: “The cumulative workload arising from a regulatory reform programme that is unfortunately increasingly fragmented, often extra-territorial, still evolving and still adding definition is hugely consumptive of resources that would otherwise be customer facing.”

HSBC reasserted that it was continuing to implement its “three strategic priorities” to grow the business and dividends, implement its Global Standards programme and streamline its processes and procedures.

During the half-year, the bank put aside some $234m for its “customer redress programmes”, to cover the costs in relation to issues such as the mis-selling of Payment Protection Insurance (PPI). However this amount was considerably lower than the $412 put aside in the first six months of 2013.

Group chief executive Stuart Gulliver added: “Whilst regulatory uncertainty persists, our balance sheet remains strong. Our ability to generate capital continues to support our progressive dividend policy. We remain well placed to meet expected future capital requirements, to continue to deliver an attractive total shareholder return and to establish HSBC as the world’s leading international bank.”

Over the past 12 months, HSBC shares are down by 17% and are rated a ‘hold’ by market consensus according to Digital Look.

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