HSBC reports drop in profits from India business; tax enquiry continues
February, 22nd 2016
HSBC Holdings Plc on Monday reported a decline in its profit before tax from its India business as part of its annual earnings announced on Monday morning. Globally, HSBC reported a pre-tax loss of $858 million in 2015 compared to a profit of $1.73 billion in 2014.
The bank’s annual report, which gives a break-up of earnings across different regions, showed that the bank reported a pre-tax profit of $606 million from its India business in 2015, 13.4% lower than the $700 million in pre-tax profit reported in 2014. The decline came due to a fall in earnings from the global banking and markets division whose pre-tax profit fell 46% to $238 million from $442 million in 2014.
Global banking and markets is the biggest division for HSBC in India and includes earnings from investment banking and treasury operations. The bank also reported a decline in pre-tax profit from its commercial banking business in India to $97 million from $121 million a year ago. The bank’s loan book in India stood at $8.04 billion at the end of 2015 compared to $7.23 billion at the end of 2014.
Separately, as part of its disclosures, HSBC said that it continues to face a tax inquiry in India, adding that it has received further notices from tax authorities in recent months.
“In India, in February 2015, the Indian tax authority issued a summons and request for information to an HSBC company in India. In August 2015 and November 2015, HSBC entities received notices issued by two offices of the Indian tax authority, alleging that the Indian tax authority had sufficient evidence to initiate prosecution against HSBC Swiss Private Bank and its Dubai entity for abetting tax evasion of four different Indian individuals and/or families and requesting that the HSBC entities show why such prosecution should not be initiated,” said HSBC.
“With respect to each of these ongoing matters, HSBC is cooperating with the relevant authorities in a manner consistent with relevant laws,” it added.
An investigation conducted by the International Consortium of Investigative Journalists (ICIJ), the findings of which were made public on 8 February, showed that HSBC may have helped clients conceal nearly $100 billion in Swiss accounts to avoid taxes. The list included 1,195 Indians and has prompted investigations by local tax authorities on whether these people had repatriated money abroad to evade tax in India.