Confident HSBC lifts dividend 50%

The HSBC hedquarters building (C) stands in Hong Kong on March 6, 2011. AFP PHOTO / ED JONES

Story highlights

  • HSBC reported a 6% fall in pre-tax profit to $20.6bn, shares fell 2.5% in early London trading
  • Group CEO Stephen Gulliver hailed 2012 as a year of "significant progress"
  • Gulliver's total remuneration fell slightly from £8m in 2011 to £7.4m in 2012

HSBC lifted its dividend by 50 per cent in the fourth quarter of 2012, signalling the bank's confidence that it is nearing the end of a three-year rehabilitation phase under chief executive Stuart Gulliver.

The group reported a 6 per cent fall in pre-tax profit to $20.6bn, reflecting both the continued pullback from some of its furthest-flung global operations, and the $1.5bn fine from US authorities over a money-laundering and sanctions breaches scandal.

But Mr Gulliver, who is in his third year as chief executive, hailed 2012 as a year of "significant progress".

"We grew our business. We increased revenues, performed well in most faster-growing markets and enjoyed a record year in commercial banking," he said in a statement on Monday. "We've made the business easier to manage and control by disposing of non-core businesses and surpassed our sustainable savings target."

Mr Gulliver's total remuneration fell slightly -- from £8m in 2011 to £7.4m in 2012, including an annual bonus of £1.95m, about half the potential maximum.

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HSBC's unusually detailed pay disclosures showed that in a scorecard measuring various aspects of his performance, he achieved full marks on rebuilding the bank's capital position, hitting dividend payout targets and pursuing stated strategic goals.

But he got zero in four areas -- return on equity, cost efficiency, brand management and compliance.

    HSBC's ROE was 8.4 per cent, well short of the target 12-15 per cent range, and its worsened cost-income ratio was 62.8 per cent, compared with the 48-50 per cent target, reflecting the fact that the bank still has restructuring work to complete.

    The bank's profit number beat consensus forecasts by about 5 per cent, and the core tier one capital ratio -- a key measure of financial strength -- was also slightly ahead of expectations at 12.3 per cent.

    HSBC declared a dividend for the fourth quarter of 18 cents a share, compared with 12 cents a year earlier. It promised to edge up the quarterly payout for the first three quarters of 2013 to 10 cents a share from 9 cents in the same period of 2012.

    HSBC's shares fell 2.5 per cent in early London trading. They have gained more than 40 per cent since the start of last year.