Higher profits, lower bonuses at HSBC, analysts estimate

Strong performance hit by US$1.9b fine payment to settle US investigation into money-laundering

PUBLISHED : Monday, 04 March, 2013, 12:00am
UPDATED : Monday, 04 March, 2013, 4:30am

Global banking group HSBC may post its highest pre-tax profit since the outbreak of the global financial crisis, but top management will still face a cut to bonuses owing to a record-high US$1.9 billion fine paid to settle a US investigation into money-laundering last year.

Analysts' estimates of HSBC's pre-tax profit for last year shows an average forecast of US$23.3 billion, up 6.3 per cent from a year earlier and the highest since 2008. That will translate into earnings per share of 88.4 US cents.

But not all analysts are positive.

While Goldman Sachs expects HSBC to report a net profit of US$17.2 billion for last year, up 6.4 per cent from a year earlier, Deutsche Bank, JP Morgan, and Citi, estimate net profit will be down between 4.6 per cent and 10.9 per cent.

Britain's The Sunday Telegraph newspaper yesterday reported that HSBC will post a pre-tax profit of US$23.4 billion for 2012, up 6.8 per cent from 2011.

After selling several international operations, including its general insurance businesses in Hong Kong and Singapore, and a stake in China insurer Ping An, the group had entered the final year of a turnover plan set in 2011, it said.

Analysts are now looking for evidence of a new China strategy from the bank after the exit of its investment in Ping An.

Sky News reported that chief executive Stuart Gulliver's bonus will be less than £2 million (HK$23.3 million) and is likely to be deferred and made subject to a clawback. In 2011 Gulliver got an annual bonus of £2.1 million, along with a base salary of £1.25 million and £3.75 million in long-term share awards, making a total of £7.2 million.

For 2012, a source close to the bank reported, Gulliver will have earned a package valued between £6 million and £7 million.

The bank will set out plans to claw back millions of pounds from senior executives deemed to have been culpable in money laundering in Mexico. The unit paid a US$27.5 million fine to the nation's regulators for non-compliance with money-laundering systems and controls.

HSBC will not name the individuals affected by the claw backs, but reports suggest that Sandy Flockhart, former head of the bank's Asian operations is on the list. Lord Green, trade minister of Britain and a former chairman of HSBC, and Michael Geoghegan, a former chief executive, are excluded.