HSBC is to reward shareholders with an increased dividend this year despite 2012 profits being hit by a money-laundering fine and compensation payouts to customers over payment protection insurance.
The bank also revealed chief executive Stuart Gulliver, who took the helm in 2011 and has since led an extensive overhaul of the business, received a £7.4 million pay package.
Gulliver said the bank had made significant progress in 2012, although its performance was marred by a record fine of £1.2 billion to settle a US investigation into money-laundering.
He said: “First and foremost we grew our business. We increased revenues, performed well in most faster-growing markets and enjoyed a record year in commercial banking.”
Pre-tax profits in 2012 fell 6 per cent to £13.7bn but when excluding movement in the value of its debt, HSBC said underlying profits were up 18 per cent to £10.9bn.
Europe’s biggest bank is in the last year of a three-year restructuring under Gulliver which has seen it close or sell 47 businesses and cut 38,000 jobs.
The bank said the shake-up had reduced both costs and risks and re-established its capital advantage over rivals, opening the door for higher dividends.
“Over the last three or four years we’ve slipped back into the pack and now we’re re-establishing the clear water between HSBC and other banks in terms of being incredibly well capitalised,” Gulliver said.
He said while the operating environment for financial institutions remained difficult, the company would benefit from its strength in mainland China and other higher growth regions.
Already one of the highest dividend payers among blue-chip companies, HSBC will bump up its first three interim payouts on 2013 earnings by 11 per cent. The rise was announced despite profit figures coming in below forecasts.
“The results have been slightly disappointing from an earnings perspective,” said Gary Greenwood, an analyst at Shore Capital.
But he added: “This time last year people were disappointed with its capital position but during the year it resolved that.”
Gulliver’s overall £7.4m salary package, down from £8m a year earlier, includes his base salary of £1.25m, around £1.2m of benefits including pension entitlement, plus long-term share incentive awards worth £3m.
A £2m bonus entitlement is subject to clawback and Gulliver will not be able to access it until he retires or leaves HSBC.
The bank, which suffered massive losses at the start of the financial crisis due to its investment in US sub-prime mortgage lender Household Finance, disclosed it paid 204 of its staff more than £1m in the year, with 78 of those based in the UK.
It said it had seen continued strong growth in Scotland with SME lending up 25 per cent and by 32 per cent in the corporate sector. The value of mortgage lending north of the Border was up 25.6 per cent.
HSBC now has just over 16 million customers in the UK and employs approximately 50,000 people. Shares in HSBC closed down 18.1p, or 2.5 per cent, at 710p.