HSBC shares dive on profits miss
HSBC, Britain’s largest bank, has reported full-year pre-tax profit of $22.6bn (£13.6bn) – up nine per cent, but below its own $24.6bn estimate and market consensus of $25bn.
But shares have tumbled this morning, down almost five per cent, as investors respond to the disappointment.
The bank has been on a drive to tighten its belt, and profits are their highest since the financial crisis, but they took a hit last year from a weaker performance in Latin America.
Slower economic growth and inflationary presses mean Brazil, Mexico and Argentina are priority markets when it comes to repositioning the bank’s portfolio, it said.
Source: Google
Pay
The lender said it paid 239 members of staff – out of 254,000 – more than £1m.
Chief executive Stuart Gulliver received a total pay package of around £8m for 2013 – up 26 per cent from a year earlier.
His base salary was £1.25m, with a bonus of £1.8m – about half of the maximum available.
The board made a “discretionary” decision to bring down Gulliver’s bonus payment for the year to 49 per cent of the maximum, despite him scoring 60 per cent on internal metrics.
EU bonus cap
Speaking to journalists and investors this morning, Gulliver said “we don’t want to do this at all”.
Gulliver’s pay includes £1.7m of “fixed pay allowance” on top of his salary and bonus, to stop his pay from falling, following the cap.
He added that, despite the Brussels-imposed restriction, the bank has no intention of moving its head office out of London.
Limiting bonuses to 100 per cent of salary – or 200 per cent if agreed by shareholders – it comes into effect on bonuses paid in a year’s time, although banks need to start making provisions now.
HSBC is the first UK bank to lay out how it’ll pay once the cap’s in place.
Capital Base
In 2013, the lender increased its core tier 1 capital ratio to 12.1 per cent, from 11.4 per cent in 2012.
Gulliver said:
Our performance in 2013 reflects the strategic measures we have taken over the past three years. Today the Group is leaner and simpler than in 2011 with strong potential for growth.
In 2013 we grew underlying profits by $6.3bn, generated $10.1bn in core tier 1 capital, achieved an additional $1.5bn of sustainable cost-savings and declared $9.2bn in dividends in respect of the year.
Our strong capital generation continues to support our progressive dividend policy and reinforces HSBC’s status as one of the best capitalised banks in the world.