HSBC Holdings plc (LON:HSBA) (NYSE:HBC), on Monday, reported a decline of 17 percent in net profit for the fiscal year 2012. The decline was partly due to London’s biggest bank paying a record fine to settle money-laundering charges.
The profit came in at $13.5 billion in fiscal 2012 compared to $16.2 billion in 2011, and falling short of analysts’ expectations. The bank could not achieve its own set target of returns on Equity between 12 percent and 15 percent. HSBC stated that it is planning to hike the first three interim dividends this year by 11 percent.
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Douglas Flint, HSBC Holdings plc (LON:HSBA) (NYSE:HBC)’s chairman acknowledged in a statement that last year was “a difficult one for all at HSBC as we addressed the restructuring of the firm against a lower-growth economic backdrop and with legacy issues and regulatory challenges imposing a further set of imperatives.”
Stuart Gulliver, chief executive of the bank said the market environment continues to pose a challenge, but HSBC will be able to benefit from the growth of China and the United States, even as Europe continues to struggle.
HSBC has withdrawn from some markets, business divisions have been sold, and some jobs have been slashed in order to increase profitability. A total of 46 businesses and investments have been closed since 2011, including four in 2012. The bank sold its stake in China’s Ping An Insurance for $9.4 billion, and closed its credit card unit in the United States to Capital One Financial for $2.6 billion. HSBC sold its Panama unit in Bancolombia for $2.1 billion last month.
Asia contributes greater than half of the profit of HSBC. The company has benefited greatly from its operations in China – which helped it to counterbalance its contracting and sluggish income in Europe since the beginning of the financial crisis. Europe was the only region where HSBC earnings declined last year.
In December 2012, HSBC Holdings plc (LON:HSBA) (NYSE:HBC) paid a record fine sum of $1.92 billion to settle charges with American authorities over breaching money-laundering rules, and handling money transfers worth billions of dollars for countries under U.S. sanctions.
According to the bank, it was successful in steadily reducing the price of its consumer lending and mortgage portfolio in the United States. Retail Banking and Wealth management operations were the two fastest growing business of the bank in 2012.
HSBC shares declined by 2.6 percent in early trading on Monday, in London.