Banking giant HSBC has handed out a mammoth 3.5 billion US dollars (£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 2.7 billion US dollars (£2 billion) in 2020 while chief executive Noel Quinn picked up a total pay package of £9 million for 2021.
HSBC’s annual report showed the group’s boss landed £4.9 million in pay and bonuses as well as £4.1 million in long-term performance share awards.
The bumper payouts came as HSBC reported pre-tax profits of 18.9 billion US dollars (£13.9 billion) for 2021, up from 8.8 billion US dollars (£6.5 billion) in 2020, when pre-tax profits fell 34% due to hefty provisions for pandemic loan losses.
We made good progress against our strategy in 2021Noel Quinn, HSBC chief executive
It comes as the results season confirms a lucrative year for bankers following NatWest’s move to increase its bonus pot for staff from £200 million to £298 million while emerging markets-focused group Standard Chartered hiked awards by 38% to 1.4 billion US dollars (£1 billion) 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 US dollars (£663 million) last year, having taken a charge of 8.8 billion US dollars (£6.5 billion) a year earlier.
Mr Quinn insisted the bank had shown “restraint” with this year’s 31% 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 £3.7 million for 2021, plus £2.4 million 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 one billion US dollars (£736 million) of its own shares after completing the previous two billion US dollar share buyback programme.
Today we announced our #HSBC 2021 financial results. By acting with purpose to deliver our strategy, we’re poised for growth in 2022. See our full results: https://t.co/N6zVyyzdLJ pic.twitter.com/vmxKlrA56X— HSBC (@HSBC) February 22, 2022
The bank’s figures showed HSBC’s UK pre-tax profits rose by 4.5 billion dollars (£3.3 billion) to 4.8 billion dollars (£3.5 billion) while its Asia operations increased by 12.2 billion dollars (£9.3 billion).
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 500 million US dollar (£368 million) 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.