HSBC profits increase to £4.7bn
- Credit: PA
Under-fire banking giant HSBC has reported better-than-expected profits as it disclosed that the UK's City watchdog has asked for information about its controversial Swiss private bank.
Pre-tax profits rose to 7.06 billion US dollars (£4.7 billion) for the first quarter, 4% ahead of the same period last year.
Chief executive Stuart Gulliver said the group had 'recovered well' after a tough end to 2014 when it was weighed down by regulatory fines and saw annual profits fall by 17%.
HSBC has been enmeshed in controversy over its Swiss private banking unit, which is alleged to have helped thousands of account holders hide billions in assets from tax authorities. It is facing criminal investigation in a number of countries.
Today it said the UK's Financial Conduct Authority (FCA) had 'issued a request for information' about the Swiss private bank.
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The FCA had previously said in February that it was 'working closely with the firm'. A request for information by the watchdog falls short of launching a formal investigation.
Today's figures come after the bank revealed recently that it was considering moving its headquarters out of the UK in response to 'regulatory and structural reforms' in the sector.
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It was also reported that it was weighing up a sale of its UK retail bank, which was known as Midland bank prior to being taken over in 1992.
HSBC said earnings were boosted by higher revenues and lower charges for bad loans but operating expenses were up as past misconduct weighed on the bank.
There was a 137 million US dollar (£91 million) hit for UK customer redress.
This included 90 million dollars (£60 million) to pay for compensating customers mis-sold payment protection insurance (PPI) and 47 million US dollars (£31 million) for commercial banking customers.
The group also took a 139 million US dollar (£92 million) regulatory provision for global private banking.
Mr Gulliver said: 'Our business recovered well in the first quarter following a difficult 4Q14 (fourth quarter of 2014).'
He said the group's global banking and markets division enjoyed its 'usual strong start to the year', with commercial banking also performing well and retail banking and wealth management seeing increased revenue.
The results were ahead of expectations but shares fell 2%.
Shore Capital analyst Gary Greenwood said: '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 penalised accordingly.'