With HSBC the last of the major banks to report earnings, inquiring minds want to know whether the lender is feeling the pain of the selloff in emerging markets. The answer is no, according to CEO Stuart Gulliver who calls the jitters due to "specific circumstances," and not a "generalized threat."
Nevertheless, earnings missed expectations. Among the issues:
Costs. 40K job cuts in three years may not be enough. Excluding the money laundering charges, expenses in 2013 actually went up thanks to compliance, wages, and litigation costs.
Bonus confusion. Winding its way around new EU bonus rules, HSBC introduces a "fixed pay allowance" and designated some of the staff "material risk takers." Referring to this new structure, Gulliver says "we would prefer not to do this."
Complicated business. HSBC blames part of the earnings miss on one-offs like the bank levy - essentially a tax on the size of the bank's balance sheet. But good luck trying to figure out the effect - depending on which exec you talk to, the levy cost anything from $321M to "over" $450M.
Previous earnings coverage
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