HSBC profits disappoint despite rise

The bank's pre-tax profits rose 9% in 2013, but shareholders had expected a 19% surge. Can't please 'em all...

by Rachel Savage
Last Updated: 04 Aug 2014

A 9% rise in profits would normally please most investors, but not HSBC’s. The bank’s pre-tax profits climbed to $22.6bn (£13.6bn) in 2013 from $20.7bn the year before. However, analysts had expected a decidedly juicer 19% rise to $24.6bn.

Fourth quarter pre-tax profits were down to $3.96bn from $4.5bn in the previous quarter and $4.4bn in the last quarter of 2012. That sent shares down over 4% in mid-morning trading.

HSBC is edging out on a limb, by becoming the first UK bank to say it is going to ask shareholders for the necessary approval pay its top staff bonuses of 200% of their salary rather than the new EU cap of 100% (not being owned by taxpayers must help…).

Chief exec Stuart Gulliver’s total payout rose from £7.5m to just over £8m, with almost all of the increase coming from a hike in his ‘variable pay’ (bonus, share-linked payments, etc), despite the bank boss admitting that HSBC had missed its cost efficiency and return on equity targets. Business as usual then.

Gulliver talked up the results of his cost-cutting plan, which has so far included 10% of staff being culled. ‘Today the Group is leaner and simpler than in 2011 with strong potential for growth,’ he said.

HSBC is still doing the best of Britain’s relatively beleaguered banks, but perhaps shareholders had expected a bit too much ‘potential for growth’…

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today