HSBC’s chairman has said the bank cannot change the past after the UK lender reported a 17% fall in profits amid the controversy surrounding its Swiss bank.
Douglas Flint said yesterday recent reports about HSBC’s private banking operations in Switzerland were a reminder of the need for constant vigilance.
“We cannot change the past. But, looking to the future, we can and must reinforce controls and provide demonstrable evidence of their effectiveness,” Flint said.
His comments came as the bank reported a 17% fall in annual profits, a bigger drop than expected.
The bank also cut its targets for return on equity, a measure of how much money it makes on the capital invested by shareholders, from 12% to 15% to more than 10%. The results sent the UK bank’s shares down more than 5%.
Profit before tax fell from $22.6-billion (R263-billion) to $18.7-billion (R217-billion) as costs rose.
Revenues took a hit as the bank had to set aside money for PPI compensation and settlements related to alleged foreign exchange manipulation.
The bank took an extra $550-million (R6.4-billion) provision related to investigations into currency rigging, for which it has already been fined almost £400-million (R7.18-billion).
Adjusting for currency changes and one-off costs, profits were down 1%.
The bank has this month been hit by allegations that its Swiss private bank helped wealthy clients evade taxes between 2005 and 2007.