HSBC has reported a net profit of $16.2bn up 15% from $14.03bn in 2012.

Despite the rise in profits the bank had to concede that it had missed key targets and analyst expectations.

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HSBC’s Hong Kong and Asia Pacific arms were responsible for the majority of the group’s profits.

The bank said it had cut its full-time staff equivalent numbers by 41,000 to 254,000 over the past three years.

Operating expenses also fell by 6% over the year, but the fall was less than analysts had forecast.

In retail banking and wealth management, underlying profit before tax increased by $2.4bn (29.5%.) to $6.6bn on the back of the run off of the failing North America mortgage portfolio.

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The bank’s loan to deposit ratio held steady at 73%.

Positive metrics at the bank include:

  • A rise in pre-tax profit of 36% and 35% respectively in Hong Kong and the rest of Asia pacific to $8.1bn and $7.8bn, and
  • The cost efficiency ratio at the bank fell from 62.8 in 2012 to 59.6 in 2013. The bank’s cost efficiency ratio target is 48 – 52 for the period between 2014-16.

Less positive metrics at the bank include:

  • Group net interest income fell to $35.5bn from $37.7bn;
  • In the bank’s retail and wealth management division, net interest income fell to $18.3bn from $20.3bn in 2012, while net fee income fell to $7bn from $7.2bn;
  • Group revenue fell to $64.6 billion from $68.3 billion in 2012, and
  • Total assets at the bank remained flat at $2.7tn.

Stuart Gulliver, Group Chief Executive, said: "Our performance in 2013 reflects the strategic measures we have taken over the past three years.

"In Retail Banking & Wealth Management underlying profit before tax increased by US$2.4bn as we made further progress in running-off the Consumer Mortgage and Lending (‘CML’) portfolio in North America, with the improvement in loan impairment charges more than offsetting the decline in revenue.

"Our Retail Banking & Wealth Management business excluding the US run-off portfolio benefited from lower UK customer redress charges and further sustainable cost savings, together with revenue growth, mainly in Hong Kong and Europe excluding the loss on sale of the HFC Bank secured lending portfolio."

The bank has come under fire following a request to raise its its bonus pool for staff by 6% to $3.9bn for 2013.

Gulliver also saw his overall pay rise, receiving a total pay package of £8m, up from £7.5m in 2012.

HSBC sold or closed 20 non-strategic businesses last year as it streamlined the business.

"The group today is leaner and simpler than in 2011, with strong potential for growth," said Gulliver.

 

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