HSBC, Europe’s biggest bank, has reported pre-tax profits of $19bn for 2010, more than double the $7.1bn figure for 2009.
HSBC said it has been profitable in every customer group and region for first time since 2006. Stuart Gulliver, recently appointed as HSBC chief executive, said the bank had made “a good start to the year”.
Unlike rival banks Lloyds and RBS, HSBC survived the financial crisis without receiving direct government support. The firm said losses from bad debts had fallen to $14bn in 2010, from $26bn in 2009.
HSBC cut its return on equity target, a measure of profitability, citing tougher capital requirement regulations.
“Overall, it’s a good set of numbers but on the net income figure, they came in a little shy on what analysts were expecting. The return on equity target is also a little light,” said Ion-Marc Valahu, a fund manager at ClairInvest.
New finance director Iain Mackay said the reduced target reflected tougher banking regulations as well as the economic environment.
“We’ve targeted 12% to 15% through the cycle for return on equity, principally taking into consideration what we view as a somewhat unstable and uneven economic recovery over the coming years as well as much higher capital requirements,” said Mr Mackay.
HSBC is headquartered in London but sees Asia as an increasingly important market.
“As a globally-connected bank with a growing presence across the world’s faster-growing regions, HSBC also benefitted from higher trade volumes and strong momentum in emerging economies, especially in Asia,” said Mr Gulliver.
However analysts said the results were disappointing.
“Apart from the profit numbers being slightly shy of analyst estimates, a further triple whammy has dented sentiment, in the form of a lower proposed return on equity, a deterioration of the cost income ratio, and further pressure on margins, particularly in its important Asian region,” said Richard Hunter, an analyst at Hargreaves Lansdown Stockbrokers.
“Given that these high hopes have been somewhat dashed again, it remains to be seen whether the current market view of the shares as a buy remains intact,” Hunter adds.
Shares in HSBC fell more than 4% in morning trading. HSBC’s annual report also showed that Mr Gulliver was paid £6.2m last year, when he ran investment banking, including a £5.2m bonus. In 2009 he received a total remuneration of £9.8m.
Meanwhile, figures published by the UK’s Financial Ombudsman revealed it received 8,238 new complaints from customers of HSBC in the second half of 2010 - the fourth highest of any financial business.