HSBC Holdings Plc (HBC: Quote,HSBA.L) reported Monday an 11 percent rise in first-half profit before tax, while net profit declined as its European operations posted a loss and it had to provide more money for UK customer redress.
The Europe's biggest lender has recognized a provision of $700 million for certain US law enforcement and regulatory matters and a further $1.3 billion to compensate customers in the U.K.
Stuart Gulliver, chief executive of the company said, "We apologise for our past mistakes in relation to anti-money laundering controls, and it is a priority for senior management to build on steps already taken to manage risk and ensure compliance more effectively."
In the first half, the company's profit before tax increased to $12.74 billion, or 8.08 billion pounds, from $11.47 billion reported last year.
The company said its recent-period pre-tax profit included $4.3 billion gains from disposals and $2.2 billion of adverse movements in the fair value of own debt. Underlying pre-tax profit declined 3 percent to $10.61 billion.
Profit attributable to ordinary shareholders of the parent company was $8.15 billion, lower than $8.93 billion a year ago. Earnings per share dropped to $0.45 from $0.50 in the year-ago quarter.
In Europe, the company posted a loss before tax of $667 million. HSBC said economic conditions in Europe and other Western economies will continue to be subdued, but it continues to believe that emerging markets will grow at a reasonable pace.
Profit before tax in Hong Kong and Rest of Asia-Pacific rose $1.3 billion and accounted for about two thirds of the total profit before tax worldwide. In North America, the company grew its pre-tax profit by 26.3 percent.
Tax expense for the period increased to $3.63 billion from $1.71 billion a year ago.
Underlying revenues grew 4 percent, with particular increases in faster-growing regions of Hong Kong, Rest of Asia-Pacific and Latin America, the company said.
Net interest income declined to $19.38 billion from $20.24 billion in the same period last year. Net fee income was $8.31 billion, compared to $8.81 billion in the preceding year.
The Group's total assets at the end of June 2012 were $2.65 billion, up 4 percent since December 31, 2011.
As at June 30, 2012, Core tier 1 ratio was 11.3 percent, compared to 10.8 percent in the previous year. .
In addition, the directors have declared a second interim dividend for 2012 of $0.09 per share, taking the total dividends declared in respect of the first half of 2012 to $0.18 per share.
HSBA.L is currently trading at 536.2 pence, up 5.1 pence or 0.96 percent, on a volume of 16.48 million shares.
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by RTT Staff Writer
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