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HSBC’s redress costs hit £830m; mortgage lending up 16%

by: Dan Jones, Simret Samra
  • 30/07/2012
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HSBC’s redress costs hit £830m; mortgage lending up 16%
HSBC has put aside $1.3bn (£830m) in UK customer redress provisions and $700m (£450m) relating to US regulatory and legal issues as it reports $12.7bn in interim pre-tax profit.

The bank has come in for heavy criticism in the US and Mexico over lapses in relation to money laundering rules, and was fined $27.5m by Mexican authorities last week.

Separate regulatory action in the UK last month, meanwhile, saw HSBC and its peers agree a settlement with the FSA to provide redress to customers mis-sold interest rate swaps.

HSBC also announced in its results that it had approved £10.6bn UK mortgages in H1 2012, up 16% compared to H1 2011.

Net lending stood at £2.4bn in the first six months of the year, while funding for UK mortgages increased from £15bn to £17bn. Mortgage balances rose from £69.1bn at the end of H2 2011, to £71.5bn in H1 2012.

The lender also announced results that it has been named as a defendant in private US lawsuits relating to the setting of LIBOR and EURIBOR.

The bank said it is co-operating with global regulators in their investigations into alleged rate-rigging by a number of institutions.

The $2bn in provisions meant HSBC’s underlying costs were $1.9bn higher than in the first half of 2011.

“Regulatory and compliance events in the first six months of the year overshadowed financial performance,” said group chairman Douglas Flint.

CEO Stuart Gulliver (pictured) said the bank is “profoundly sorry” for its mistakes and committed to putting them right, in part via a new structure to help it manage risk and compliance more effectively.

The bank’s pre-tax profit for the six months to 30 June 2012 was in line with analyst estimates, and up 11% on the year, though underlying profit fell 3% year-on-year to $10.6bn.

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