Banking giant HSBC disappointed the City this morning with a 6 per cent drop in full-year profits to $20.6 billion (£13.7bn).
Europe’s biggest bank took a $5.2bn write-down on the value of its debt, but mitigated the news by promising higher dividends in the current year.
The group also had to account for $1.9bn of fines and penalties paid as part of a settlement with American and UK authorities in relation to a US investigation into money-laundering. And it made additional provisions of $1.4bn in respect of “UK customer redress” in 2012.
But chief executive Stuart Gulliver said the bank made significant progress in 2012.
“First and foremost, we grew our business. We increased revenues, performed well in most faster-growing markets and enjoyed a record year in commercial banking,” he said.
“We’ve made the business easier to manage and control by disposing of non-core businesses and surpassed our sustainable savings target. We also agreed a settlement with the US and UK authorities in respect of our past anti-money laundering and sanctions failings.
“Based on our current understanding of the capital rules we are extremely well-placed with regard to Basel III compliance, re-establishing our position as one of the best capitalised banks in the world. This provides a firm base on which to keep growing the business organically and allows us to increase dividends to $8.3bn.”
Gulliver received a bonus of just under £2 million as part of a total pay and benefits package worth £7.4m. The overall figure compares with £8m a year earlier.
His bonus payment will be deferred and subject to possible clawback, while he will not be able to cash it in until he retires from or leaves HSBC.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “By HSBC’s own elevated standards, the results are something of a mixed bag.
“Reputationally, the bank has emerged tarnished over the last year, alongside many of its competitors. In addition, some of the metrics have moved in the wrong direction – in particular, the cost/income ratio and the return on capital numbers will need further attention.
“However, despite being down 6 per cent from the previous year and below general expectations, the pre-tax profit figure is substantial.”
