‘Leaner’ HSBC profits jump to $16.2bn

February 25, 2014 - 12:57:33 am

People queue at an ATM of an HSBC branch in Hong Kong. 

LONDON: HSBC announced yesterday a 15.5-percent rise in annual net profits as the bank, Britain’s biggest, pushed on with a major cost-cutting programme last year.

The group’s share price tumbled in London morning trade on news that pre-tax profits undershot analysts’ consensus forecast.

HSBC also voiced caution over growth in emerging markets, amid weakness for the bank in Latin America.

Profit after tax climbed to $16.2bn in 2013, the London-headquartered lender said in an earnings statement, adding that it was increasing its bonus pool by six percent.

Net profit had stood at $14.03bn  in 2012, when HSBC was hit by US money-laundering fines, mis-selling scandals and a huge accounting charge.

“Our performance in 2013 reflects the strategic measures we have taken over the past three years,” said HSBC chief executive Stuart Gulliver, referring to the bank’s cost-cutting programme which has reduced its worldwide staff total by 41,000 since 2011.

“Today the group is leaner and simpler than in 2011 with strong potential for growth,” Gulliver said in comments included in the bank’s earnings statement. 

He said the bank was “optimistic about the longer-term prospects of emerging markets” despite its own expectations “of greater volatility in 2014 and choppy markets”.

The bank will meanwhile push on with its savings programme, having announced in May plans to cut costs by a further $2bn to 3bn between 2014 and 2016.

HSBC added that its pre-tax profit rose nine percent to $22.6bn last year, lower than market expectations of $24.5bn according to a survey by Dow Jones Newswires.

The bank’s share price tumbled 3.68 percent to 630.3 pence on London’s FTSE 100 index, which was down 0.51 percent.

“Annual profits at the bank are up nine percent but fall short of expectations, and while the firm remained optimistic on long term prospects they also kept a cautious tone for the year ahead, with emerging markets remaining vulnerable,” said Toby Morris, senior trader at CMC Markets.

The bank’s bonus pool for 2013 increased to $3.92bn on an annual basis. HSBC had a global headcount of 254,000 at the end of 2013 after making cost savings of $1.5bn last year and $4.9bn since 2011. “This comfortably exceeded our (three-year) target of $2.5-3.5bn and provides good momentum into 2014,” Gulliver said. There was no update of a worldwide probe into suspected rigging of foreign exchange trading after HSBC was drawn into the investigation last November.

Its performance in 2012 had meanwhile been hit in part by a $1.9bn fine to settle US allegations of money laundering that were said to have helped Mexican drug cartels, terrorists and Iran.

HSBC was founded in Hong Kong and sees Asia as its main market. AFP