HSBC’s pre-tax profits fall 17%

HSBC reported a 17% fall in annual pre-tax profit and cut its profitability target, saying that allegations its Swiss business had helped customers to dodge taxes had brought shame on the bank.

Results yesterday from Europe’s biggest bank reflected the cost of past misconduct and of protecting itself against the impact of further scandals.

HSBC said allegations about its Geneva-based arm, raided last week by Swiss officials and now the subject of a UK inquiry, had badly damaged its image.

“A number of us, myself included, think the practices of the private bank back in the past are a source of shame and reputational damage to HSBC. I think shame would be reasonable noun to use,”CEO Stuart Gulliver told reporters.

Gulliver was himself thrust into the centre of the scandal on Sunday when The Guardian newspaper said he had sheltered millions of pounds in HSBC’s Swiss private bank via a Panamanian company. HSBC confirmed Gulliver has a Swiss bank account and while there is no suggestion he broke any rules, the revelations come at a sensitive time.

HSBC’s chairman Douglas Flint is due to appear before lawmakers tomorrow to answer questions about the bank’s alleged complicity in tax evasion.

Gulliver is among the highest paid bank executives in Europe with a pay packet last year amounting to £7.6m (€10.3m).

HSBC’s pretax profit of $18.7bn (€16.5bn) for 2014 was down from $22.6bn the year before and below the average analyst forecast of $21bn, after a $3.7bn bill for provisions, fines and settlements arising from a range of misdeeds, including attempted manipulation of foreign exchange markets.

Gulliver, appointed CEO in 2011, has sold or closed 77 businesses and axed over 50,000 jobs to try and simplify HSBC’s sprawling business and boost earnings after higher capital requirements imposed since the financial crisis make it more difficult for large banks to make a profit.

* Reuters