HSBC (LON:HSBA) warned today it was facing unprecedented regulatory pressure as first half profits dropped by 12%.
Douglas Flint, the bank’s chairman, said additional regulation, stress tests across multiple regions and UK ring-fence proposals were making heavy demands on its staff and systems.
Increasing financial penalties levied on banks and individuals were also making staff more risk averse, especially with banks so much in the spotlight, he added.
HSBC has been embroiled recently in scandals involving sanction busting, money laundering and foreign exchange manipulation and said higher expenses were a for the drop in profits to US$12.3bn from US$14.1bn in the half year to June. Underlying profits fell by 4%.
Costs rose by 2% to US$18.2bn and by 4% on an underlying basis as the group invested more in risk, compliance and global systems.
Revenues fell by 4% to US$31.4bn, while there was a US$1.1bn reduction in the bad debt charge to US$1.84bn.
Stuart Gulliver, chief executive, said: “Whilst regulatory uncertainty persists, our balance sheet remains strong and our continuing ability to generate capital supports both growth and our progressive dividend policy.”