HSBC has increased bonus payouts for its chief executive after fourth-quarter profits more than doubled on the back of a jump in mortgage and loan costs for its borrowers.
The London-headquartered lender said it had increased Noel Quinn’s bonus by 36% to nearly $2.2m (£1.8m), taking his overall pay to $5.5m for 2022. That compares with his $4.9m payout in 2021.
The strong performance in the final three months of 2022 also means HSBC is planning its highest annual shareholder payout in four years – worth 32 cents a share – as it tries to appease its largest investor, Ping An, and stave off further calls to split off the more profitable Asian business. Executives are also planning a special dividend of 21 cents a share – worth roughly $4bn in total – once HSBC completes the sale of its Canadian business.
HSBC, which makes the bulk of its profits in Asia, reported $5.2bn in pre-tax profit for the last three months of 2022, more than double the $2.5bn it reported for the same period a year earlier.
That was partly because of “strong growth” in net interest income, which accounts for the difference in the amount paid out to savers compared with the amount charged for loans and mortgages. The lender has benefited from the rise in interest rates across most of the 62 countries and territories in which it operates, including the UK, as central banks have tried to curb inflation caused by the war in Ukraine. It has led lenders to increase borrowing costs for their customers.
On an annual basis, HSBC’s profits fell 7% to $17.5bn because of a $2.4bn charge linked to the sale of its retail banking network in France.
However, the bank was affected by the $3.6bn it put aside to cover a potential increase in defaults by its borrowers, including those in the UK, where HSBC expects the economy could experience a “relatively shallow” recession.
Quinn told journalists on Tuesday that while there were some signs that UK customers were struggling due to higher borrowing rates and the broader cost of living crisis, it was not presenting a major concern. He applauded Rishi Sunak’s government for having restored stability on financial markets, helping ease the cost of borrowing, after Liz Truss’s disastrous mini-budget.
“We’ve seen marginal-to-small signs of stress in our book at the moment in the UK,” Quinn said. “There is still a challenging year ahead and a number of people remortgaging on to higher rates, but I’m pleased that the yield curve has come down because of the positive action that government took. We’re passing on the reduction of that yield curve as quickly as possible into the cost of borrowing for our mortgages.”
Meanwhile, HSBC said the overall annual bonus pool for its top-performing bankers fell 4% to £3.4bn.
HSBC made multimillion-pound payouts to its highest-earning bankers, with 429 receiving more than €1m (£888,000) in 2022. Fourteen were paid more than €5m each, while one unidentified banker was took home more than €11m – double Quinn’s pay – according to disclosures in HSBC’s annual report.
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Quinn indicated he was comfortable with receiving a higher payout, despite the slight drop in the overall bonus pool, and ongoing job cuts that have been a key part of HSBC’s efficiency drive.
“The group’s financial performance was strong in 2022… if you go back to the prior year, the 2021 bonus pool was up for the majority of our [staff] and for the executive directors, it was not significantly up: it was flat. So it goes in swings and roundabouts,” Quinn said.
The bank has cut around 15,800 roles since it announced plans to slash around 15% of its then-235,000 global workforce in 2020. HSBC said it now employs around 219,200 staff.
Quinn said 2022 was “another good year for HSBC” and it was “on track to deliver high returns in 2023”.
