HSBC survived the financial crisis without receiving direct government support HSBC, Europe’s biggest bank, has reported pre-tax profits of $19bn (£11.8bn) for 2010, more than double the $7.1bn figure for 2009.
Losses from bad debts fell to $14bn in 2010, from $26bn in 2009.
However, analysts said the results had fallen short of expectations, sending shares down 4.5%.
HSBC also said that chief executive Stuart Gulliver was paid £6.2m last year, including a £5.2m bonus, down from a total package of £9.8m in 2009.
He will take all of his 2010 bonus in the form of restricted shares which will only be released to him over time.
“It is a lot of money,” said BBC business editor Robert Peston. “And it will upset those who see most banks as part of the economic problem, rather than part of the solution.”
However, he added that HSBC was one of the world’s very biggest businesses, with a market value greater than the combined value of Barclays, Lloyds and RBS.
Equity target
Mr Gulliver, recently appointed as HSBC chief executive, said the bank had made “a good start to the year”.
It said it had been profitable in every customer group and region for first time since 2006, but some analysts said there was some cause for concern.
“The underlying pre-tax profit is significantly disappointing,” said Cormac Leech, an analyst at investment banking firm Canaccord.
Richard Hunter, an analyst at Hargreaves Lansdown Stockbrokers, pointed out that as well as announcing a lower proposed return on equity, HSBC saw “further pressure on margins, particularly in its important Asian region”.
“Some will see HSBC 2010 profits rebound as a sign that better times for most banks will follow”
“Given that these high hopes have been somewhat dashed again, it remains to be seen whether the current market view of the shares as a buy remains intact,” Mr Hunter added.
Economic recovery
HSBC also cut its return on equity target, a measure of profitability, citing tougher capital requirements.
New finance director Iain Mackay said the reduced target reflected tougher banking regulations as well as the economic environment.
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“We’ve targeted 12% to 15% through the cycle for return on equity, principally taking into consideration what we view as a somewhat unstable and uneven economic recovery over the coming years as well as much higher capital requirements,” said Mr Mackay.
HSBC is headquartered in London but sees Asia as an increasingly important market.
“As a globally-connected bank with a growing presence across the world’s faster-growing regions, HSBC also benefited from higher trade volumes and strong momentum in emerging economies, especially in Asia,” said Mr Gulliver.
Unlike rival banks Lloyds and RBS, HSBC survived the financial crisis without receiving direct government support.
Meanwhile, figures published by the UK’s Financial Ombudsman revealed it received 8,238 new complaints from customers of HSBC in the second half of 2010 – the fourth highest of any financial business.
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