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Tuesday 17.07.2018 | Name days: Aleksejs, Aleksis

HSBC profit grows, fines too

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HSBC Holdings is expected to report a jump in quarterly profits on Monday as lower losses from bad debts and a cost-cutting plan outweigh mis-selling charges and the impact of tough economic conditions across the world.

Europe’s biggest bank will be the last of Britain’s major lenders to report and all are facing intense scrutiny on how far they are streamlining operations, the impact of tougher regulations, and their standards as they get hit with fines and compensation charges for past misconduct.

HSBC Chief Executive Stuart Gulliver kicked off the bank’s restructuring in early 2011, before most rivals, and the benefit is starting to feed through to the bottom line, Fox Business reported.

The bank should report an underlying profit – after stripping out the impact of disposals and changes in the value of its own debt – in the July-September quarter of between $4.9 billion and $6.6 billion, according to a range of analysts’ forecasts, up from $3 billion a year earlier.

Gulliver is well into his plan for $3.5 billion in cuts, axe unprofitable areas and direct investment to Asia. He has cut 27,000 jobs and sold or closed 26 businesses, including selling its U.S. credit card arm and half of its U.S. branches.

However, problems continue to cast a shadow on the company’s finances. The size of a fine it faces for lax anti-money laundering controls in the United States may reach $1.5 billion. HSBC declined to comment.

Analysts have said the bank may also have to set aside about 150 million pounds more to cover mis-selling of UK payment protection insurance.

HSBC is also one of more than a dozen banks under scrutiny in the Libor global interest rate-rigging scandal that has put the industry’s culture and standards under fire.

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