The bank said the rise in profits was helped by an 8% fall in underlying costs (this time last year, it had just shelled out $2bn on regulatory fines). Revenues, though, slid 7% to $34.4bn – which caused share prices to plummet 4% this morning.
So things aren’t exactly peachy for the bank, and conditions are likely to get worse. Although Barclays, RBS and UBS have been hit by hefty fines for their parts in the Libor-rigging scandal, HSBC has yet to be penalised – but its management isn’t holding out much hope. There’s also the small issue of money-laundering, for which HSBC is likely to be punished over the next few months.
‘HSBC… [has] been named [among] the defendants in putative class action lawsuits in New York and Chicago,’ it sighed. Alas, when you’re the ‘world’s local bank’, there may be the odd occasion when the locals turn against you…
Chairman Douglas Flint also spoke out against a European crackdown on bankers’ bonuses. He said HSBC is ‘looking at a range’ of ways to combat new restrictions on bonuses, which could be capped at one times salary.
‘We have to be competitive,’ he said.
‘The cap on variable pay as a proportion of fixed pay is very uncomfortable when we make our market where these restrictions are not faced by our competitors.’
Options to combat the new rules include hiking salaries – but not, he was keen to emphasise, moving HSBC’s headquarters from the UK.
All of this, though, is dependent on receiving the backing of shareholders. Two years ago, they agreed a remuneration framework – but, given the bank’s inability to meet expectations, they might not see now as the right time to start discussing payrises again.