HSBC has warned it could face further costs even after taking an additional $800 million charge to cover potential penalties in the US for money laundering violations and making another $357 million (£224m) provision for payment protection insurance (PPI) compensation in the UK.
The additional provision in the third quarter means the London-based bank, which is chaired by Scot Douglas Flint, has now put $1.5 billion (£939m) aside to cover potential fines relating to the findings of a US Senate report that billions of dollars were laundered for drug barons and terrorists. The figure does not include legal costs.
HSBC chief executive Stuart Gulliver said: "The final number could still be materially higher than that $1.5bn."
The bank warned that it is likely to face corporate criminal as well as civil charges.
Mr Gulliver said that HSBC was now considering the risk of financial crime as a part of its criteria when deciding which businesses to shed during its ongoing restructuring.
Its provision for PPI compensation in the UK has now hit £1.3bn.
Mr Gulliver said the bank had paid out $1bn (£626m) of this in redress so far.
"There are no signs of a reduction in the volumes of claims," he said.
"I do not think this will necessarily represent the last provision we will make."
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "The money laundering provision is a concern, particularly given the uncertainty on what the final figure might be.
"The additional PPI provision, while prudent and in line with its peers, is another reason for investors to think carefully about entering a sector fraught with unknowns, while management outlook comments remained unconvincing."
The third-quarter results season has been dominated by increased charges for PPI mis-selling compensation.
Last week Lloyds Banking Group, which is the owner of Bank of Scotland, set aside a further £1bn and Royal Bank of Scotland raised its provision by £400m.
The additional penalties, as well as the impact in changes in the value of its own debt, led to a 50.7% fall in HSBC's reported pre-tax profit for the three months to September 30 to $3.5bn (£2.2bn).
HSBC's shares fell 8.1p or 1.3% to 618p.
The bank revealed that it has shed 21,000 jobs worldwide in 2012 to date to take its workforce to 267,000.
Mr Gulliver warned that there would be more job cuts as the bank seeks to keep a lid on costs.
HSBC is taking market share in the UK small business market as it benefits from ties with companies that sell into the more resilient markets, such as those in Asia, Mr Gulliver said.
But he added that overdraft utilisation among smaller companies was currently just 40%, indicating a "muted" demand for credit.
Mr Gulliver said: "While subdued economic conditions persist in Europe and other Western economies, we remain confident in our outlook for growth in the emerging world and, particularly, in mainland China, where we continue to expect a soft landing."
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