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HSBC Reports Pre-Tax Profit Of £6.75bn

(c) Sky News 2012

HSBC has reported a profit before tax of £8.09bn and underlying pre-tax profit of £6.75bn for first half of 2012.

However, HSBC revealed that it would need to address problems with the widening interest rate-fixing scandal.

The underlying pre-tax profit of was down 3% compared to the same period last year.

HSBC also warned that growth in Europe and the US is likely to be below par for the rest of this year and in 2013.

The global bank said "it needs to take concrete steps to resolve Libor issues, particularly in the US".

The banking giant, which has come under the recent scrutiny of US regulators over money laundering, said it would set aside nearly £1.3bn for legal costs.

This includes provision over mis-selling of payment protection insurance (PPI) and interest rate swaps to UK customers.

As well as costs relating to infractions in Mexico, the US provision of £446m also takes in possible penalties for violations of a bank secrecy act in a case going back two years.

Earlier this month, HSBC paid a fine of 379m Mexican peso (£18m) to Mexican authorities for non-compliance with money laundering controls.

A US Senate investigative committee reported that in 2007 and 2008 HSBC Mexico physically transported to the US about $7bn (£4.46bn) in cash.

"Bulk cash shipments could reach that volume only if they included illegal drug proceeds," the committee concluded.

HSBC Mexico acknowledged in a statement that it failed to report 39 suspicious transactions and had been late in reporting 1,729 others.

Bank chairman Douglas Flint and chief executive Stuart Gulliver apologised for the money-laundering infractions.

"We must demonstrate that we have learned from earlier mistakes," Mr Flint said.

"The banking industry is operating in a hostile climate so we must double our efforts to convince our regulators, customers and investors that we are striving for the highest possible standards.

"Only that way can we allay public fears and regain trust in our industry."