HSBC report 'significant progress'

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 $20.6 billion, reflecting both the continued pull-back from some of its furthest-flung global operations, and the $1.5 billion 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”.

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

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 cent a share, compared with 12 cent a year earlier.

It promised to edge up the quarterly pay-out for the first three quarters of 2013 to 10 cents a share from 9 cent in the same period of 2012. – (Copyright The Financial Times Limited 2013)