HSBC’s group profit fell 62 percent compared to 2015, in a results statement that revealed the regulator is keeping a close eye on its anti-money laundering procedures.
The personal loans figure was recorded for the entire year of 2016. It is made up of around £1.1bn of ‘non-renegotiated’ and about £706m of ‘renegotiated’ impaired personal loans across the continent.
As a group, the bank reported a pre-tax profit of around £5.7bn for 2016, compared to £15.2bn recorded in 2015.
The bank also recorded around £329m of written off personal loans in Europe as of January 1 2016.
Earlier this year HSBC voluntarily agreed with the Financial Conduct Authority to set up a redress scheme for customers who had to pay "unreasonable" charges between 2003 and 2009.
The bank said it is on track to set up its UK ring-fenced bank by 2018. It said it has appointed the chair and chief executive of HSBC UK and is making progress with other senior appointments.
HSBC said the migration of key roles for the ring-fenced bank is underway with around 35 percent of Birmingham positions already filled.
The results announcement also revealed there are “significant” concerns, identified by an outside party, surrounding HSBC enhancing its financial crime compliance controls, including improvements to its global anti-money laundering (AML) policies and procedures.
These concerns were highlighted in a report from an independent compliance monitor that was appointed to the bank, by the US Department of Justice and the Financial Conduct Authority in 2012.
The independent party assessed the effectiveness of the group’s AML and sanctions compliance programme.
HSBC said it’s working to implement the recommendations made in the review.
Stuart Gulliver, HSBC group chief executive, said: “We are anticipating and adapting to long-term social, economic and technological trends that are changing the environment we operate in.
“We are responding to the adoption of rapidly evolving digital technologies by our customers by launching innovative ways to make banking faster and safer.”
He added: “HSBC is now the biggest financial services user of biometrics globally, and we continue to roll out voice recognition and fingerprint technology.”
Gulliver also said the bank anticipates new challenges from geopolitical developments, heightened trade barriers and regulatory uncertainty in the year ahead.