HSBC hit again

Underlying costs grew 11 per cent and included $1.9bn in fines paid to the US authorities over inadequate money laundering compliance, as well as a further $1.4bn relating to redress for customer mis-selling issues in the UK. Consequently, HSBC's key performance metrics suffered, with the cost efficiency ratio deteriorating from 57.5 per cent to 62.8 per cent, while the return on average shareholders' equity slipped from 10.9 per cent to 8.4 per cent. On a brighter note, the core tier 1 ratio rose from 10.1 per cent to 12.3 per cent, reflecting improved capital generation and a reduction in risk-weighted assets following a string of disposals. There was also a $7.5bn gain from selling businesses, including the US card and retail services business and an agreement was reached to sell HSBC's stake in Ping An.

Once again, emerging markets provided the growth element, with operating profits in Hong Kong up from $5.77bn to $7.5bn, with the rest of Asia-Pacific reporting profits up from $4.64bn to $7.34bn. A drop in impairment charges helped, too - down 31 per cent for the group to $8.3bn - with a big improvement in the US, where the bad debt charge fell by half to $3.46bn. That helped lift US operating profit from $65m to $2.3bn. However, the European operation turned last year's operating profit of $4.67bn into a $3.41bn loss.

Broker Investec Securities is reviewing its estimates but currently expects EPS of 100.5¢ for 2013 (74¢ in 2012) with tangible nest assets (NTA) of 799¢.