HSBC shares tumble as profit disappoints

Adam Jeffery | CNBC

Logo of HSBC bank

HSBC, one of the world's largest banks, suffered a hit to its share price on Monday morning after posting disappointing results.

Larger than anticipated impairments and a lower capital 1 tier ratio than hoped helped send the share price tumbling, according to analysts. Shares closed down by over 4 percent.

HSBC delivered slightly worse than forecast profits of $14.1 billion for the first half of 2013 as chief executive Stuart Gulliver's cost-cutting campaign continued.

Gulliver said in a statement: "These results demonstrate that we have continued to make progress on delivering our strategy."

(Read more: HSBC Could Cut 14,000 More Jobs In War on Costs)

The bank was expected to report pre-tax profit of $14.6 billion for the half-year, according to a Reuters poll. Profit was up 10 percent from the same period in 2012.

"Quality looks very poor in the results," Ed Salvesen, equity analyst at Brewin Dolphin, told CNBC.com. "Overall I think there will be some downgrades following this."

He highlighted larger-than-anticipated impairments - particularly in Latin America, where charges reached $1.4 billion - as one of the factors causing concern in the market.

Salvesen added that the market had been hoping for a higher capital build than the reported 10.1 percent common equity tier 1 ratio (the measure which will be used to monitor the bank's financial health under new European banking reforms).

(Read more: HSBC: Why We Are Still Bullish on China)

Revenues for the six months to the end of June improved, coming in $34.37 billion, but below an expected $34.8 billion.

Part of the reason for this improvement was a better picture on its bad loan book, with loan impairment charges and other credit risk provisions were down to $3.1 billion, compared to $4.8 billion in the first half of 2012.

After a scandal over money-laundering in Mexico, which cost HSBC almost $2 billion to settle, the bank has beefed up its regulatory and financial crime compliance units by 1,600 employees.

The bank issued a warning about proposed U.K. banking reforms in its results statement. It said the mooted changes will be "challenging to implement" and warned of potential "unintended consequences."

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