HSBC profits boosted by cost cuts

24 February 2014 Last updated at 12:40

HSBC profits tick higher in 2013 helped by cost cuts

"There's nothing fundamentally wrong" with HSBC's results says Matthew Beesley from Henderson Global Investors

HSBC has reported a 9% rise in profit for last year, boosted by cost cuts as it restructured the business.

Reported pre-tax profit was $22.6bn (£13.6bn), compared with $20.6bn in 2012, the bank said.

HSBC said it had also increased its bonus pool for staff by 6% to $3.9bn for last year.

Chief executive Stuart Gulliver also saw his overall pay rise last year. He received a total pay package of £8m, up from £7.5m in 2012.

The bank also revealed that 239 of its staff, 93 of whom are in the UK, had been paid £1m or more last year.

HSBC also said that for 2014, it would offer senior staff higher fixed-pay allowances.

The move will enable the bank to sidestep new European rules, which came into force in January, preventing bankers from being paid bonuses worth more than twice their salary.

TUC general secretary Frances O'Grady criticised the move.

"It would be great if banks put the same effort into lending to small businesses and investing in infrastructure as they do to getting round EU rules on boardroom bonuses," she said.

Cost cutting

HSBC sold or closed 20 non-strategic businesses last year as it streamlined the business.

"The group today is leaner and simpler than in 2011, with strong potential for growth," said chief executive Stuart Gulliver.

Hong Kong and Asia Pacific were responsible for the bulk of the group's profits.

The banking group said it had cut its full-time staff equivalent numbers by 41,000 to 254,000 over the past three years.

Operating expenses also fell by 6% over the year, but the fall was less than analysts had forecast.

Choppy markets ahead

The bank also warned that it expected "greater volatility" and "choppy markets" this year.

"Overall, we remain optimistic about the longer-term prospects of emerging markets," it added.

Shares fell more than 3% after the results.

Gary Greenwood, analyst at Shore Capital, said the results, which were lower than consensus expectations, were "disappointing".

"Given the headline miss in the 2013 results, we would be surprised if there were not to be downgrades to our own and market consensus expectations for 2014 and beyond," he added.