HSBC to lift dividend as 2012 profit declines

HSBC, Europe's largest bank, pledged to increase its dividend as strong growth in Hong Kong and other core Asian markets boosted its capital even though annual profit fell short of expectations.

The bank on Monday said it made a 2012 pretax profit of $20.6 billion, down 6 per cent from the previous year and below the average forecast of $22.7 billion from 28 analysts polled by Reuters. Profits were hurt by a $5.2 billion loss on the value of its own debt.

HSBC, already one of the highest dividend payers among Britain's blue-chip companies, said it plans to bump up its first three interim payouts on 2013 earnings by 11 per cent to 10 cents per share after strong earnings in Asia and the sale or closure of scores of businesses boosted its capital reserves.

HSBC's shares were down 2.2 per cent at 712 pence in early trade, lagging the benchmark Stoxx Europe 600 Banks Index, which was 0.93 per cent weaker. HSBC's stock has risen nearly 30 per cent over the past 12 months, outperforming the benchmark's 9 per cent gain in the same period.

HSBC has closed or sold 47 businesses over the past two years to cut costs, boost profits and manage risk and while it is ahead of schedule on squeezing costs, improving profitability has been more difficult due to a weak global economy and higher regulatory costs.

HSBC operates in more than 80 markets, some of which Chief Executive Officer Stuart Gulliver, 53, is retreating from to boost return on equity, a measure of profitability, to at least 12 per cent. The company paid $1.92 billion to settle US money-laundering probes in December.

Return on equity, a key measure of profitability, dropped to 8.4 per cent from 10.9 per cent at the end of 2011, putting it well behind this year's target of 12-15 per cent.

On an underlying basis, pretax profit rose 18 per cent boosted by a strong performance in its commercial banking operation.
£7.4-million pay package for bank’s CEO Gulliver

HSBC handed a £7.4-million pay package to Chief Executive Stuart Gulliver (pictured) for 2012, the bank said in its annual report.

Europe's biggest bank said its five best-paid employees earned a total of £27.8 million in 2012, including 21.5 million pounds in bonuses. Its highest paid banker who is not a director was paid 7 million pounds.

Gulliver's package comprised a base salary of £1.25 million, benefits worth £1.2 million, an annual bonus of £1.95 million and shares awarded under a long-term incentive plan worth £3 million. It was lower than the £8 million total package he received in 2011.

Speaking to reporters, Gulliver said it was too early for the bank to take a view on proposals by European regulators to place a cap on the bonuses that can be paid by banks.