LONDON - HSBC, Britain’s biggest bank, said on Monday that its net profit fell 17 percent last year because of a record fine to settle money-laundering charges and changes related to the value of its own debt.
Profit fell to $13.5 billion last year from $16.2 billion in 2011, falling short of analyst expectations. The bank also missed its own target of a return on equity of between 12 percent and 15 percent. The shares fell 2.6 percent in early trading in London on Monday.
Douglas Flint, HSBC’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.â€
The bank’s chief executive, Stuart Gulliver, added in a statement that he expected the market environment to remain “difficult,†but that HSBC would benefit from growth of the economies in China and the United States even f European markets continued to struggle.
To fulfill his pledge of increasing profitability, Mr. Gulliver took the bank out of some markets, sold business divisions and cut jobs. HSBC has closed or sold 46 businesses and investments since 2011, including four this year. The bank sold its stake in China’s Ping An Insurance for $9.4 billion and offloaded its credit card unit in the United States to Capital One Financial for $2.6 billion. The British firm also sold its Panama unit to Bancolombia for $2.1 billion last month.
HSBC in December was forced to agree to a record $1.92 billion fine to settle charges with American authorities over breaching money-laundering rules, including that the bank handled money transfers worth billions of dollars for countries under U.S. sanctions.
HSBC generates more than half of its profit in Asia. Growth in China had helped the London-based bank compensate for shrinking or slower growing income in Europe since the beginning of the financial crisis. ! Europe was the only region where HSBC earnings declined last year.
The bank said it made good progress in gradually reducing the size of its consumer lending and mortgage portfolio in the United States. HSBC’s fastest growing business last year was its retail banking and wealth management operation.
HSBC added that it planned to increase the first three interim dividends this year by 11 percent.
