Dubai: HSBC Holdings, caught up in a tax evasion scandal at its Swiss private bank, on Monday reported a lower-than-expected pre-tax profit as costs rose and investment banking earnings declined.
The banks profit before tax for 2014 fell 17 per cent to $18.7 billion (Dh68.68 billion) from $22.6 billion a year earlier.
“2014 was a challenging year in which we continued to work hard to improve business performance while managing the impact of a higher operating cost base,” Stuart Gulliver, Chief Executive Officer, said in a statement.
Pre-tax profit at the investment banking unit fell 38 per cent to $5.9 billion.
The decline in profits comes amidst accusations that the bank’s Swiss private banking unit helped customers avoid taxes. A report in UK’s Guardian newspaper said the bank’s CEO had his own Swiss bank account, used to hold bonuses.
The bank’s earnings for the year were adversely impacted by conduct fines, settlements, customer redress and associated provisions cost the bank $3.7 billion in 2014. Settlements and provisions for currency-rigging investigations amounted to $1.2 billion last year.
Despite a decline in its global profits, HSBC reported an 8 per cent growth in its Middle East and North Africa (Mena) profits before tax from $1.69 billion in 2013 to $1.82 billion last year.
In the UAE, the bank reported a pre-tax profit of $662 million last year, up 4 per cent compared to $636 million in 2013. In Saudi Arabia, profit grew by 11 per cent to $486 million driven by higher revenue and increased income from its associate, The Saudi British Bank.
“Our operations in the Middle East and North Africa reported a profit before tax of $1.8 billion, an increase of 8 per cent on a reported basis, despite the effects of business disposals, including the loss on sale of our Pakistan business,” the bank said in its 2014 annual report.