HSBC raises dividend as profits falls to $20.6bn

By Harry Wilson, Banking Editor

Profits were down 6pc year-on-year, missing City expectations by nearly $3bn.

The fall was largely due to a $5.2bn charge against changes in the value of the bank's own debt, as well a $1.9bn fine related to a US money-laundering investigation, and $1.4bn of provisions for the mis-selling of payment protection insurance and interest rate swaps.

Bonuses across the bank totalled $3.7bn, down from $4.2bn, while the bonus pool for staff in the lender investment banking arm rose slightly from $1.21bn to $1.27bn.

The fall in the size of HSBC's overall bonus pot reflected the cost of the fines imposed on the bank, which it said had been "taken into account" when deciding pay levels for the year.

Stuart Gulliver, chief executive of HSBC, hailed the "significant progress" made by the business last year, saying the bank had exceeded its annual cost savings target of $3.5bn.

"We increased revenues, performed well in most faster-growing markets and enjoyed a record year in Commercial Banking. We’ve made the business easier to manage and control by disposing of non-core businesses and surpassed our sustainable savings target," said Mr Gulliver.

Commercial Banking reported a 7pc rise in profit before tax to $8.5bn.

HSBC is paying an 18 cent a share dividend in the fourth quarter, up 29pc on the same quarter in 2011 and taking the total payout for the year up 10pc to 45 cents.

The bank also said it planned to bump up its first three interim dividends for next year by 11pc to 10 cents a share. 

Shares in HSBC fell more than 2pc in early trading.

Bad debts - or consumer loans that have turned sour - fell to $8.31bn from $12.13bn last time and HSBC also revealed that its cost-cutting programme had exceeded the group's target.

Mr Gulliver's own pay package was worth £7.4m, including an annual bonus of £1.95m. This compares to a bonus last year of £2.2m and long-term share awards worth £3.75m, compared to £3m this year.

The bank also revealed that paid 204 of its staff more than £1m in 2012, 78 of those were based in the UK.