HSBC has reported a pre-tax profit of £7.3bn in its half-year results, down 13 per cent from £8.37bn a year earlier, owing to “unprecedented” regulatory pressures.
The company allocated £139m for UK customer redress in the first six months of the year, compared with £245m in the same period in 2013. This allocation covers the cost of missold payment protection insurance, investment advice and interest-rate swaps.
PPI misselling redress totalled £115m in the first six months of 2014, compared with £218m a year earlier.
HSBC is also awaiting the outcome of regulatory investigations into its business practices, which could leave the bank facing “significant fines or sanctions”.
The European Commission is currently investigating HSBC in relation to the manipulation of key interest-rates and associated derivatives. In May, the commission published its statement of objections, alleging anti-competitive practices.
HSBC says: “Based on the facts currently known, with respect to each of these ongoing regulatory investigations, there is a high degree of uncertainty as to the terms on which [these investigations] will be resolved and the timing of such resolution, including the amounts of fines and/or penalties.
“As matters progress, it is possible that the fines and/or penalties imposed could be significant.”
HSBC Group chief executive Stuart Gulliver says the level of regulatory pressure on the business is “unprecedented”.
He says: “The demands now being placed on the human capital of the firm and on our operational and systems capabilities are unprecedented.
“The cumulative workload arising from a regulatory reform programme that is unfortunately increasingly fragmented, often extra-territorial, still evolving and still adding definition is hugely consumptive of resources that would otherwise be customer facing.”