HSBC still faces regulatory headwinds

Like other major banks, HSBC is steering its way through a minefield of litigation relating to trading misconduct, including possible foreign-exchange market rigging and the mis-selling of mortgage backed securities in the US. A further $1.6bn (£1bn) was set aside late last year to cover this, but even adjusted operating expenses - which strip out the fines - rose 6.1 per cent to $37.8bn.

These pressures show no sign of abating. The regulatory timetable for the current year is pretty full, as global banks progress with a root and branch programme of reforms to bolster their ability to cope with the sort of problems that emerged during the financial crash. These reforms, which inevitably require substantial investment, are expected to take another five years to complete.

On a brighter note, loan impairment charges and other credit-risk provisions fell from $5.8bn to $3.9bn as economic conditions improved. Adjusted revenue of $62bn was also marginally higher, thanks to growth in commercial banking, notably in the UK and Hong Kong. The group’s capital cushion, or tier-one capital ratio, edged up from 10.8 per cent to 10.9 per cent, confirming HSBC's status as one of the world’s best capitalised lenders.

On a divisional level, the commercial banking business delivered record profits, but revenues from retail banking and wealth management fell. Again, the pressures here reflect the implementation of tougher controls as well as the sale of a number of businesses and customer portfolios.

Subject to review, the analysts at Investec are forecasting pre-tax profits of $23.6bn for the current year and EPS of 86.9¢.