HSBC reported pre-tax profits of $20.6bn for 2012, a 6% drop on the previous year. However, underlying profits, which strip out the impact of movements in the value of its debt, were up 18% to $16.4bn.
The results included the biggest fine ever levied against a bank, a $1.9bn payment to settle accusations of money laundering. HSBC also had to set aside $2.3bn in compensation for mis-selling financial products in Britain. Chief executive Stuart Gulliver received a £1.95m bonus.
What the commentators said
“What would it take for a banking executive to not be awarded a bonus?” wondered James Moore in The Independent. US regulators charged HSBC with acting as a conduit for Mexican drug money and helping Iran to evade sanctions. The fine “puts a tarnish over everything HSBC has done” and “warranted a gesture from its leaders”.
The pay row aside, the message from the results is that “not only is HSBC too big to fail”, said Peter Thal Larsen on Breakingviews – “it’s too big to damage”. Despite the record fine and other payments, it still boosted underlying profits and now has enough capital to raise its dividend.
The bank is “enjoying beautiful trading conditions in the Far East”, said Nils Pratley in The Guardian, while the West “is a drag”. But because the former is so much bigger than the latter – Hong Kong and the rest of Asia Pacific accounted for 75% of underlying profits – “the ship moves on”.
Now just imagine if HSBC had managed to avoid the money-laundering settlement and its 2003 US subprime purchase, Household. The bank “could have been an exciting growth story, rather than an illustration of strength through diversity”.