HSBC Holdings PLC, struggling to contain a scandal over tax evasion at its Swiss private bank, posted lower-than-expected profit as costs rose and investment banking earnings tumbled.
Its shares fell.
Pretax profit for last year dropped 17 percent to US$18.7 billion from US$22.6 billion a year earlier, the London-based bank said in a statement. That missed the US$21.5 billion average estimate of 19 analysts surveyed by Bloomberg. Operating costs climbed 6.1 percent to US$37.9 billion.
chief executive officer Stuart Gulliver, 55, has faced a political storm after a report by the International Consortium of Investigative Journalists this month showed details of how its Swiss unit handled accounts for tax evaders and criminals in past years. That has overshadowed Gulliver’s efforts to revive profit growth by exiting 74 businesses since 2011.
“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,” Gulliver said in the statement.
The investment bank “suffered a poor fourth quarter,” Gulliver said.
Pretax profit at the investment bank fell 38 percent to US$5.9 billion, exceeding the 23 percent drop estimated by 16 analysts surveyed by the bank.
HSBC shares dropped 2.7 percent to 589 pence at 8:19am in London.
Chairman Douglas Flint, 59, is giving evidence to the British Parliament tomorrow, following accusations that HSBC helped customers avoid taxes through its Swiss private bank.
Conduct fines, settlements, customer redress and associated provisions cost the bank US$3.7 billion last year, the statement said.
Settlements and provisions for currency-rigging investigations were US$1.2 billion, while British customer redress program expenses rose to US$1.28 billion from US$1.24 billion last year.
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