forex-related fines and warned it could face a $500 million bill to compensate US customers sold debt protection products.
Shares in the bank fell nearly six percent, their biggest intra-day drop since November 2011, to hit a near 2-1/2 year low. By 1217 GMT they were down 5.9 percent at 569.4 pence.
“For all the recent media furor around potential conduct issues, it is the ‘underlying’ performance which, we believe, should be the greatest cause of investor concern, right across revenues, costs and impairments,” said Ian Gordon, analyst at Investec, which rates HSBC as a “hold”.
Gulliver, appointed CEO in 2011, has sold or closed 77 businesses and axed over 50,000 jobs to try and simplify HSBC’s sprawling business and boost earnings after higher capital requirements imposed since the financial crisis make it more difficult for large banks to make a profit.
Gulliver said the job was far from done, but rejected some calls from regulators or investors for breaking up big banks such as itself or JPMorgan.
“We’re still on a journey to simplify the firm ... and I don’t rule out that we might make more disposals. But I don’t think the firm is too big to manage. You can see the validity of the business on the revenue side, even if the cost of running (a big bank) has clearly gone up,” he said.
HSBC has increased the amount of capital it holds to absorb potential losses by over 60 percent since before the crisis.
Gulliver said the bank intended to increase its core capital to between 12-13 percent from 10.9 percent currently, to give it enough reserves to deal with regulators’ demands.
The bank cut its target for return on equity to more than 10 percent in the next 3-5 years from 12-15 percent, originally set in 2011. This measure of profitability fell to 7.3 percent in 2014 from 9.2 percent in 2013.
Gulliver said the bank needed to improve profitability in Latin America, Turkey and the United States, and in areas of its commercial and investment bank.
Before the financial crisis returns in excess of 10 percent were the norm for large banks.
Group revenues were stable and the bank’s commercial banking division generated record profits but its global banking and markets division, which includes HSBC’s investment bank, reported a 38 percent drop in profits due to lower revenues and higher costs.