HSBC Sets Aside $2 billion for Mis-selling and Laundering
LONDON -- Another day, another bank says sorry, as HSBC (ISE: HSBA.L) today announced underlying costs of $2 billion in the bank's interim results, including U.K. customer redress provisions of $1.3 billion and $700 million set aside for "US provisions for certain law enforcement and regulatory matters" relating to the money-laundering scandal that recently hit the headlines.
Stuart Gulliver, group chief executive, commented: "We apologise for our past mistakes in relation to anti-money laundering controls, and it is a priority for senior management to build on steps already taken to manage risk and ensure compliance more effectively."
Although pretax profits were announced as 11% higher than the first half of last year ($12.7 billion for H1 2012 versus $11.4 billion for H1 2011), they don't take into account one-off charges such as the aforementioned $2 billion. Overall, underlying profit before tax was down 3% to $10.6 billion.
The scandal has caused the bank to face one of the biggest hits to its reputation in recent years, and shareholders have been hit accordingly: Profit attributable to ordinary shareholders is down 9% on this time last year at $8.2 billion, and earnings per share were reported at $0.45, down 12% from H1 2011. However, dividends were not cut, remaining in line with the previous year at $0.18 per ordinary share.
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