HSBC (HSBA) has become the latest UK lender to see its third-quarter performance hit by rising misconduct-related costs. The bank set aside a further $1.6bn (£1bn) in total, which included a $378m provision for possible foreign exchange market rigging, a $550m charge connected to the mis-selling of mortgage-backed securities in the US and a further $589m PPI-related provision.
But while that helped drive underlying pre-tax profit down 6 per cent in the first nine months of 2014 - to $17bn - HSBC’s operating performance remains resilient. Credit quality has continued to improve, for instance, and the group’s bad debt charge for the nine months fell almost 45 per cent compared to the same period in 2013. Adjust for currency effects and HSBC saw further loan growth, too, notably in the UK and Hong Kong. HSBC’s capital cushion, meanwhile, has continued to build. Its Basel III basis common equity tier one capital ratio reached 11.2 per cent, ranking HSBC as one of the world’s best capitalised lenders.
