HSBC bank says annual net profit drops 16.5%

Asia-focused banking giant HSBC said on Monday that net profits sank by 16.5 percent to $14.03 billion (10.78 billion euros) in 2012, a year in which it was rocked by a US money-laundering scandal.

Profit after taxation had stood at $16.8 billion in 2011, London-headquartered HSBC said in a results statement. Pre-tax profits meanwhile fell six percent to $20.65 billion.

HSBC's performance was hit by a $1.9-billion fine to settle US allegations of money laundering that were said to have helped Mexican drug cartels, terrorists and Iran.

The bank's results were also dented by a vast $5.2-billion charge against the value of its own debt.

And it set aside an additional $1.4 billion to cover customer redress programmes in Britain. That took its total annual bill to $4.3 billion.

However, HSBC added that its capital position improved following a string of asset sales, including its stake in Chinese insurance giant Ping An.

And bad debts -- or consumer loans that have turned sour -- fell to $8.31 billion from $12.13 billion last time around.

HSBC also revealed that its cost-cutting programme had exceeded the group's targets.

Two years ago, in 2011, the bank announced a large restructuring programme, including plans to save up to $3.5 billion by 2013 and to axe 30,000 jobs globally.

However, HSBC added Monday that it generated extra savings of $2.0 billion, giving an annualised total of $3.6 billion.

"HSBC made significant progress in 2012. First and foremost, we grew our business. We increased revenues, performed well in most faster-growing markets and enjoyed a record year in commercial banking," said chief executive Stuart Gulliver.

"We've made the business easier to manage and control by disposing of non-core businesses and surpassed our sustainable savings target.

"We also agreed a settlement with the US and UK authorities in respect of our past anti-money laundering and sanctions failings."

Gulliver will meanwhile receive a deferred annual bonus of just under £2.0 million as part of a total package worth £7.4 million. That compared with an overall figure of £8.0 million in 2011.

HSBC is Europe's biggest bank by assets, was founded in Hong Kong, and sees Asia as its main market despite being headquartered in London.