HSBC profits hit $12.7bn
London, UK (31/07/2012)
It’s going to be a long day for the PR execs in HSBC’s comms department. On the one hand, pre-tax profits are up 11% year on year for the first half of 2012, topping $12.7bn. This should be cause for celebration… except that the results are being released in the midst of a media furore over money-laundering and the mis-selling of PPI insurance at the bank. The message to the general public: who said crime doesn’t pay?
HSBC is desperately attempting to gather together the tattered shreds of its corporate reputation by issuing yet another apology for its misdeeds. ‘HSBC has made mistakes in the past, and for them I am very sorry,’ mumbled group chairman Douglas Flint through his face-ful of humble pie this morning. The bank is also putting aside a further £1.3bn to settle compensation claims over the PPI scandal.
As for blind-eye turning while Mexican drug cartels cleaned billions through its vaults, HSBC is coughing up $700m in a pre-emptive fine. This is the same regulator-mollifying stunt that Barclays pulled earlier this month over the Libor-fixing scandal… Speaking of which, HSBC is being investigated on this front too. If evidence of wrongdoing is found, these bumper profits, (mostly generated in Asia, which CEO Stuart Gulliver describes as ‘an absolute powerhouse’), may well be whittled down significantly.
So far, HSBC has taken around a 3% hit to its earnings as a result of the PPI and money-laundering payouts. But who knows what further fines await in the second half? With Gulliver pledging a full-scale reshuffle of the bank’s internal workings – never an inexpensive task – promising transparency and stringent compliance, and downsizing HSBC’s ‘high risk’ (read also, high rewards) portfolio, the next six months could be tough.
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