23rd February 2015
HSBC has reported a steep fall in its annual profits following what it has described as a “challenging year”.
The bank, currently under the spotlight for allegedly helping wealthy clients to avoid tax payments, said on Monday that its annual profits fell 17% to $18.7bn.
Europe’s biggest bank blamed the impact of fines and settlements as well as UK customer redress for the sharp drop. Following the update, in early trading shares in the bank fell 6%, or 34.2p to 571p.
Allegations have recently emerged that HSBC aided customers evade their UK tax obligations by using Swiss based bank accounts.
Swiss officials recently searched offices of the Geneva subsidiary of HSBC bank following the allegations. The bank has just confirmed that its chief executive Stuart Gulliver uses a Swiss bank account to hold his own bonuses.
In a statement accompanying the results, Gulliver said: “2014 was a challenging year in which we continued to work hard to improve business performance while managing the impact of a higher operating cost base.
“Profits disappointed, although a tough fourth quarter masked some of the progress made over the preceding three quarters. Many of the challenging aspects of the fourth quarter results were common to the industry as a whole. In spite of this, there were a number of encouraging signs, particularly in Commercial Banking, Payments & Cash Management and renminbi products and services. We were also able to continue to grow the dividend.”
Addressing the firm’s Swiss private bank scandal, group chairman Douglas Flint added that the recent disclosures around “unacceptable historical practices and behaviour within the Swiss private bank remind us of how much there still is to do”.
He said: “They are also a reminder of the need for constant vigilance over the effectiveness of our controls and the imperative to embed a robust and ethical compliance culture.
“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.