HSBC makes £500m provision for money laundering fines

HSBC 480

FTSE 100 bank HSBC has set aside an extra £500m ($800m) to cover fines over money laundering allegations, according to its interim management statement.

According to the interim statement, the bank is in discussions with US authorities but has yet to come to an agreement, but warns financial penalties could be “significantly higher”.

The provision contributed to a 4 per cent increase in operating expenses for the third quarter of the year, reflecting increased investment in regulatory and compliance infrastructure and higher litigation costs.

The bank reported pre-tax profits of $3.5bn for the third quarter in its interim management statement, although this remained lower than the prior-year period’s $3.7bn. HSBC revealed underlying pre-tax profits of $5bn during the third quarter, a 125 per cent increase on the the prior-year period. Pre-tax profits for the nine months to 30 September was $16.2bn, down £2.4bn year-on-year.

Group chief executive Stuart Gulliver says: “We continue to execute our strategy to ensure that we are aligned with the key global trends of growth in international trade and capital flows and wealth creation, particularly in faster-growing markets.

“We have made significant progress in delivering our strategic priorities to simplify, restructure and grow HSBC.”

He adds: “While subdued economic conditions persist in Europe and other Western economies, we remain confident in our outlook for growth in the emerging world and, particularly, in mainland China, where we continue to expect a soft landing.”