Yahoo Finance HSBC boosts bonuses to £2.6bn as annual profits double
HSBC (HSBA.L) more than doubled its annual profits to $18.9bn (£13.9bn) and announced plans to repurchase shares worth up to $1bn as the lender was helped by lower bad loans and operating expenses.
The London-based bank said in an earnings statement on Tuesday that profit before-tax was up $10.1bn to $18.9bn, with 65% of the profit generated in Asia.
HSBC said its UK arm recorded a leap in profits to $4.8bn during 2021 following earnings of $300m over the previous 12 months.
The bank said the increase was driven by a net release of expected credit losses and other credit impairment charges, along with a higher share of profit from its associates.
The bank’s board has approved a second interim dividend of $0.18 per share, making a a total for 2021 of $0.25 per share as all regions reported a profit
The lender also announced plans for a $1bn share buyback, adding to a $2bn buyback announced late last year.
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"We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy," chief executive officer Noel Quinn said in the statement.
Revenue for the quarter rose 2% compared with the same period a year ago, to $12bn, while adjusted profits before tax for the year came in at $21.9bn, a 79% increase.
The lender said that if central bank interest rates rise worldwide as expected, the resulting improvement in its lending margins would mean it hits its goal of a double-digit return on equity in 2023, a year earlier than expected.
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HSBC said it expects a weaker performance in its wealth management in Asia in the first quarter of 2022.
“We also remain cognisant of the potential impact that further COVID-19-related uncertainty and continued inflation might have on us and our clients,” Quinn said.
The bank increased its staff bonus pool to $3.5bn (£2.6bn), a move it said was justified due to its strong financial performance and the need to compete for bankers in an “extraordinarily competitive labour market”.
“It is critical for our long-term performance that we continue to attract and retain the talent necessary to deliver our strategic priorities,” HSBC said.
The report shows that 451 of its bankers received $1m (£832,000) or more last year, with Quinn taking home home $12.4m (£9m).
“While HSBC’s pre-tax profits nearly doubled in the final quarter of 2021, looking beyond this headline number the bank’s results were a little mixed," Will Howlett, equity analyst at Quilter Cheviot, commented
"HSBC posted pre-tax profits which were actually a little behind expectations, reflecting higher loan loss charges including increased allowances for Chinese commercial real estate, which follows market concerns," he added.
The past years have been dominated by repeated restructurings at the lender, which embarked on a restructuring programme to slash 35,000 jobs to refocus on its most profitable areas in Asia and the Middle East.
“HSBC’s results are a real mixed bag, but that is commonplace with most banks these days. In a nutshell, commercial banking is doing well, and its returns target might be achieved a year ahead of plan.
“However, there are some headwinds in its core territory of Asia including uncertainty around China’s property market, and the share buyback scheme has only been extended by up to $1bn, much less than some analysts had expected," Russ Mould, investment director at AJ Bell, said.
Richard Hunter, Head of Markets at interactive investor, commented “The underwhelming reaction to the numbers in Hong Kong overnight has carried over to the UK in early trade, as profits rose sharply but remained shy of expectations.
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