Business

HSBC pays out £2.6bn in bonuses as profits more than double

HSBC's annual pre-tax profit more than doubled to $18.9 billion (£13.9 billion) for the year ending December 31
HSBC's annual pre-tax profit more than doubled to $18.9 billion (£13.9 billion) for the year ending December 31 HSBC's annual pre-tax profit more than doubled to $18.9 billion (£13.9 billion) for the year ending December 31

BANKING giant HSBC has handed out a mammoth $3.5 billion (£2.6 billion) in bonuses as it revealed annual profits more than doubled.

The group hiked its staff bonus pool by nearly a third to its highest level since 2014, up from $2.7bn (£2bn) in 2020 while chief executive Noel Quinn picked up a total pay package of £9m for 2021.

HSBC's annual report showed the group's boss landed £4.9m in pay and bonuses as well as £4.1m in long-term performance share awards.

The bumper payouts came as HSBC reported pre-tax profits of $18.9bn (£13.9bn) for 2021, up from $8.8bn (£6.5bn) in 2020, when pre-tax profits fell 34 per cent due to hefty provisions for pandemic loan losses.

It comes as the results season confirms a lucrative year for bankers following NatWest's move to increase its bonus pot for staff from £200m to £298m while emerging markets-focused group Standard Chartered hiked awards by 38 per cent to $1.4bn (£1bn) for 2021.

HSBC results have been buoyed as it joined fellow banks in releasing bad debt cash set aside in the early days of the pandemic after defaults have proved lower than feared across the sector.

It released $900 million (£663 million) last year, having taken a charge of $8.8bn (£6.5bn) a year earlier.

Mr Quinn insisted the bank had shown "restraint" with this year's 31 per cent bonus pool hike despite acknowledging that much of the profit rise was down to the release of loan loss provisions.

He said the group bonuses had not risen as much as profits, just as they did not fall as much as earnings did in 2020.

HSBC said it made the decision to increase payouts as it faces a "very competitive market for talent", with Mr Quinn saying the group also wanted to be "fair to our people".

The annual report also showed top bosses at the group donated salary increases for 2021 to charity "given the ongoing challenging external environment" - amounting to £22,000 for Mr Quinn.

Chief finance officer Ewen Stevenson - whose total pay packet jumped to £3.7m for 2021, plus £2.4m in long-term share awards on top - also donated his £112,000 fixed pay allowance increase to charity.

HSBC's annual results showed the firm brought forward a key profitability target by a year thanks to rising interest rates worldwide as central banks tackle surging inflation.

There was also cheer for investors as the group unveiled a second interim dividend of 0.18 dollars (£0.13) per share and announced it would buy back up to £1bn (£736m) of its own shares after completing the previous two billion US dollar share buyback programme.

The bank's figures showed HSBC's UK pre-tax profits rose by $4.5bn (£3.3bn) to $4.8bn (£3.5bn) while its Asia operations increased by $12.2bn (£9.3bn).

Mr Quinn said the results reflected the global economic recovery from the pandemic.

But the figures came in below City expectations as its fourth-quarter performance was impacted by a $500m (£368m) charge for credit losses, including a hit from the downturn in China's commercial property sector.

The bank also revealed it is under investigation by US regulators over staff use of services such as WhatsApp.

Mr Quinn said "record keeping" was being looked at by many US banks, adding the group will "participate fully" with the probe.