HSBC, Britain’s biggest bank and one of the best for business bank accounts, recently announced that its profits before tax have risen to £7.2bn in addition to cautioning other countries to act with co-ordination to effect regulatory change in their own banking practices.
HSBC chief executive Michael Geoghegan stated that so-called “universal” banks – which HSBC can be classified as – should be permitted to to continue operations in their present forms instead of being split into two separate entities for retail banking and investment banking. This is in direct opposition to the suggestions recently made by the UK’s coalition government.
Geoghegan claimed that universal banks that were managed well not only play a role in contributing to financial growth but also increase economic stability, since universal banks strive to meet all the needs of their customer base in an interconnected, globalised world. In support of this trend towards globalisation, Geoghegan recently relocated to Hong Kong.
HSBC commented that the bank’s profits had been aided by a reduction in its impairment charges for personal and business loans which were paid late. The level of charges had fallen to its lowest level since the beginning of the global economic crises, dropping nearly 50 per cent.
Geoghegan stated that this reduction in charges was one of the benefits of stabilising economic health.
Outside of the UK, the bank’s profits were lower in Europe, where the investment banking branch dragged overall performance down, and also in the Middle East. HSBC’s profits in its Asian markets had risen by 20 per cent, however.
Geoghegan commented that he remained bullish concerning markets that were currently emerging, urging G20 member country regulators to enact capital requirement changes at the same pace as they effected change in any rules regarding pay and bonuses. This is in light of the hefty bonus taxes HSBC had to pay recently on bonuses it had disbursed in France and the UK.