HSBC defends $1bn pay hikes
Posting a pre-tax profit just shy of $22bn yesterday, the largest in 2011 by a Western bank, HSBC said it was confident growth in Asia, Latin America and the Middle East would continue to offset sluggish conditions in Europe.
However, with costs rising 10% in 2011, due partly to surging wages in emerging markets, chief executive Stuart Gulliver said it would be a challenge to meet the 2013 target for reducing costs as a proportion of income. HSBC employs 400 people in Ireland.
Banks across Europe have been posting hefty losses as the eurozone debt crisis has hit their trading profits, and as they strive to meet tough new rules aimed at preventing a repeat of the banking crisis.
HSBC, Europe’s biggest bank and which makes over three quarters of its profits outside Europe and North America, has been relatively unscathed due to its strength in faster-growing emerging markets.
“We remain comfortable with the (outlook in) emerging markets and are confident that GDP growth in emerging markets will be positive and China will have a soft landing,” Mr Gulliver said.
He was paid £8m (€9.62m) last year — including a £2.2m bonus — down from £8.4m in 2010, when he ran HSBC’s investment bank.
HSBC said pre-tax profit rose 15% to $21.9bn in 2011. The figure fell short of the group’s record profit of $24.2bn in 2007, but beat all other Western banks that have reported so far for last year.
The world’s most profitable banks in recent years have been Chinese groups ICBC, which made a €26bn pre-tax profit in 2010, and China Construction Bank, which made €21.1bn.
HSBC’s profit was boosted by a $3.9bn accounting gain on the value of its debt. Stripping that out, underlying pre-tax profit fell 6% to $17.7bn.
— Reuters
