Financial Results

HSBC Global Private Banking Reports Pre-Tax Profits Loss

Stephen Little Reporter November 5, 2013

HSBC Global Private Banking Reports Pre-Tax Profits Loss

The global private banking arm of HSBC reported a pre-tax loss
of $16 million for the third quarter 2013, compared to a pre-tax profit of $252
million for the same period last year.

During a call with analysts, HSBC's chief executive Stuart
Gulliver said that this was a result of the write-off of goodwill relating to
the private banking business in Monaco,
which it had considered selling earlier this year, litigation provision and the
repositioning of the business.

"The three of them together explain the material
changes year-on-year, of which provision and goodwill have by far and away had
the biggest impact," said Gulliver.

Net interest income decreased as higher yielding positions
matured and opportunities for reinvestment were limited by prevailing rates,
lending and deposit spreads narrowed and average deposit balances fell, the bank said.

The bank's cost/efficiency
ratio was 99.8 per cent in the third quarter of 2013, compared to 66.3
per cent at the end of the second quarter in June.

Group profit

HSBC banking group as a whole reported a pre-tax profit rise of
30 per cent in the third quarter of 2013 at $4.5 billion, compared with $3.5
billion in the same period in 2012. 

Earnings per share and dividends per share for the nine
months to September 30, 2013, were $0.71 and $0.30, respectively, compared with
$0.58 and $0.27 for the equivalent period in 2012.

The core tier 1
capital ratio strengthened to 13.3 per cent from 12.7 per cent at 30 June 2013.

On a geographic breakdown of
the results, Europe posted a pre-tax profit of $2.7 billion, while Hong Kong
accounted for $6.2 billion, other Asia-Pacific at $6.5 billion; Middle East and
North Africa at $1.2 billion; North America at $1 billion, and Latin America at
$686 million.

"Our home markets of the UK
and Hong Kong contributed more than half of
the group’s underlying profit before tax. Hong Kong
performed well in the quarter, reflecting broad-based revenue growth. Hong Kong
continues to benefit from its close economic relationship with mainland China. We
remain well positioned to capitalize on improving economic conditions in these
markets," said Gulliver.

Register for FamilyWealthReport today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes