HSBC’s yearly profits fall 17%

<p>The bank blamed “a challenging year” for the fall in profits.</p>

HSBC has posted a 17 per cent fall in annual profits before tax to $18.68 billion (£12.14 billion) in 2014. It blamed the "negative effect" of "significant items including fines, settlements, UK customer redress and associated provisions" for the slide.

"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," HSBC chief executive Stuart Gulliver said in a statement.

"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," he added.

The bank has been hit by a series of scandals, including the mis-selling of payment protection insurance (PPI), and allegations that its Swiss private bank helped clients evade UK tax using hidden HSBC accounts in Geneva.

HSBC's shares tumble

The Financial Conduct Authority (FCA) has recently announced it is looking into the HSBC bank over its Swiss tax-dodging scandal. It said it is working closely with the firm and other agencies which have an interest in this matter to ensure that any questions this may raise in relation to any current practices and culture of HSBC are addressed. The Treasury Committee also said it is to take evidence on the allegations.

The bank's share price fell more than five per cent today (February 23rd) after the publication of the results.

This comes a day after Stuart Gulliver was dragged into a tax row himself, with HSBC confirming he used a Swiss bank account to hold his bonuses.

"I'm UK tax resident, Hong Kong domiciled. I've paid full UK tax on the entirety of my worldwide earnings. It's not surprising as a 35-year HSBC veteran that I should be Hong Kong domiciled. I would expect to die abroad, which is a test of domicility," he said.

The chief executive saw his overall pay for the year fall to £7.6 million from £8.03 million in 2013. The lower sum is due to a smaller bonus of £3.4 million for the year, compared to £5.5 million in 2013. 

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.