Provisions take slice out of HSBC’s third quarter

BANKING giant HSBC has posted weaker-than-expected results for the third quarter.

BANKING giant HSBC has posted weaker-than-expected results for the third quarter as it set aside $US1.7 billion ($1.94bn) to cover one-off charges, including $US378 million to cover a potential settlement in the UK Financial Conduct Authority’s probe of foreign-exchange markets.

HSBC said adjusted pretax profit fell 12 per cent to $US4.4bn in the three months because of the provisions. Adjusted revenue across the bank was flat at $US15.6bn. The adjusted figures strip out price moves in the bank’s own debt and gains and losses from disposals.

In addition to the charge for the forex probe, HSBC took a $US701m provision to compensate customers for missold products and $US550m for settlement with the US Federal Housing Fin­ance Authority. Restructuring costs were $US68m. Net profit rose to $US4.53bn from $US3.2bn as bad loans fell in the period.

The bank said discussions were ongoing with the UK’s Financial Conduct Authority “regarding a proposed resolution of their foreign exchange investi­gation with respect to HSBC Plc’s systems and controls relating to one part of its spot FX trading business in London”.

Other banks, including Barclays and Royal Bank of Scotland have taken similar provisions in the past week.

The Financial Conduct Authority aims to reach settlements within weeks with six banks after an 18-month probe into foreign exchange markets.

The potential settlements are separate from investi­gations by global authorities into allegations of attempted manipulation of currency prices and information sharing between traders.