LONDON (AP) — HSBC PLC, Europe's biggest bank by market value, saw its profits more than double in the first quarter as it booked fewer bad loans than in the same period last year and reaped the benefits of recent restructuring measures.
The bank, which has a big presence in many parts of the world including China, said Tuesday that its net profit rose to $6.35 billion in the first three months of the year from $2.58 billion in the same period of 2012.
Chief Executive Stuart Gulliver said the bank has made progress in increasing revenue and reducing costs, cutting some 40,000 jobs out of a workforce of 300,000 since 2011. He also alluded to efforts made to embed changes into the corporate structure to prevent money laundering at the immense institution.
"We have achieved further progress on the journey we started in 2011 to make HSBC easier to manage and control," he said in a statement. "The implementation of global standards will help ensure that we meet the commitments we made to the U.S. and U.K. authorities as part of the settlement agreements reached at the end of last year."
The changes came after the group agreed to pay nearly $2 billion last year to settle a money-laundering case involving illicit drug money from Mexico. The case, brought by U.S. and U.K. officials, led to the resignation of the bank's head of compliance after it was found HSBC had lax controls that exposed it to money-laundering and terrorist financing. The bank also paid a $1.4 billion fine in the U.K. for improperly selling financial products to customers.
A more detailed look at the bank's earnings shows that net interest income fell to $8.97 billion from $10.08 billion. However, it said that was made up by a rise in trading income and fewer bad loans and insurance claims compared with last year.
Gulliver said challenges remain even though some parts of the global economy are improving.
The bank expects the U.S. economy to grow faster than other developed economies, though not at the same pace as previous recoveries. Elsewhere, it expects the mainland Chinese economy to accelerate after a slower than expected start to the year, while the economy of the 17 European Union countries that use the euro shrinks.
"While continuing uncertainty in the global economy has created a relatively muted environment for revenue growth, we have increased revenue in key areas including residential mortgages and commercial banking in both our home markets of Hong Kong and the U.K., and in our financing and equity capital markets business," Gulliver said.
HSBC's share price was up 2.7 percent at 733 pence.
Analysts said the bank was already benefiting from its three-year restructuring process.
"The company continues to focus on costs and reducing its complexity, with underperforming/non-scalable units being ditched," said Mike van Dulken, head of research at Accendo Markets in a statement. He added that its strong financial performance "is a function of a more diverse geographical exposure, which sets it apart from more UK-focused peers."