Asian costs take a shine off HSBC win
SOARING costs have hit profits at HSBC after it spent heavily on paying its bankers in the Far East.
HSBC said success in emerging markets was becoming increasingly expensive, with costs rising 10 per cent, or $3.9bn – a third of that due to higher pay.
HSBC posted a 15 per cent rise in pre-tax profit to $21.9bn, driven by a record performance from its commercial bank. Group underlying pre-tax profit fell six per cent to $17.7bn.
Stuart Gulliver, chief executive, said: “Wage price inflation and competition for staff is very high. We are not the only people to work out that the emerging markets have high GDP growth and there’s a limited pool of talent.”
Profits at the investment bank fell 24 per cent to $7bn, as Eurozone turmoil hit capital markets work.
Overall bonus payments fell two per cent to $4.2bn for a year in which the bank was fined for mis-selling products to elderly customers. Gulliver received a total of £7.2m, including a £2.2m bonus.
The bank’s cost-efficiency ratio slipped, however, to 57.5 per cent from 55.2 per cent. Its target is 48 to 52 per cent and Gulliver admitted it would be a “challenge” to meet the target to reduce the ratio by 2013.
HSBC also disclosed it is in dispute with HMRC over tax which could cost up to $4.9bn.