LONDON – HSBC, Europe’s biggest bank, said Tuesday that pretax profits were up 4 per cent to $7.1 billion in the first quarter from a year earlier, even as it beat back increasing regulatory costs.
The bank is increasing internal controls after enduring a string of scandals and paid billions in penalties to regulators around the world. It is under pressure from politicians and authorities alike after recent revelations that its Swiss private bank helped the wealthy evade taxes.
It set aside $137 million for British customer redress programs and $139 million for regulatory provisions in the global private bank division.
CEO Stuart Gulliver, said the business recovered well following a difficult final quarter in 2014 and that the bank experienced lower loan impairment charges in Europe and North America. Gulliver says HSBC will continue “to deliver cost-savings over the remainder of 2015 and beyond.”
Though the earnings beat expectations, shares fell 3.2 per cent to close at 625.90 pence.
“In our opinion, HSBC still has some seriously heavy lifting to do if it is to adapt to an environment in which large complex banks are frowned upon by regulators and penalized accordingly,” wrote Gary Greenwood, of Shore Capital Markets.