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Leaner HSBC bank hikes profits, bonuses
AFP 'Leaner' HSBC bank hikes profits, bonuses

London (AFP) - HSBC on Monday warned over emerging markets volatility after struggling in Latin America last year, but Europe's biggest bank still managed a 15.5-percent jump in annual net profits.

London-headquartered HSBC also controversially unveiled measures to avoid new EU rules on bank bonuses, drawing the wrath of union bosses.

Profit after tax at the bank climbed to $16.2 billion (11.8 billion euros) in 2013 as it pushed on with a major cost-cutting programme that is set to continue at least for another two years.

The group's share price slid in London trading however, on news that pre-tax profits missed market expectations.

Net profit had stood at $14.03 billion in 2012, when HSBC was hit by US money-laundering fines, mis-selling scandals and a huge accounting charge.

Group revenues meanwhile dipped five percent to $64.6 billion last year.

"Our performance in 2013 reflects the strategic measures we have taken over the past three years," said HSBC chief executive Stuart Gulliver, referring to the bank's cost-cutting programme which has reduced its worldwide staff total by 41,000 since 2011.

"Today the group is leaner and simpler than in 2011 with strong potential for growth," Gulliver said in comments included in the bank's earnings statement.

He said the bank was "optimistic about the longer-term prospects of emerging markets" despite its own expectations "of greater volatility in 2014".

HSBC noted that in Latin America, where underlying pre-tax profit fell, earnings were impacted by "slower economic growth and inflationary pressures".

The bank will meanwhile push on with its savings programme, having announced in May plans to cut costs by a further $2.0 billion to $3.0 billion between 2014 and 2016.

HSBC added that its pre-tax profit rose 9.0 percent to $22.6 billion last year, lower than market expectations of $24.5 billion according to a survey by Dow Jones Newswires.

The bank's share price shed 2.83 percent to close down at 635.70 pence on London's FTSE 100 index, which rose 0.41 percent.

"Annual profits at the bank are up 9.0 percent but fall short of expectations, and while the firm remained optimistic on long term prospects they also kept a cautious tone for the year ahead, with emerging markets remaining vulnerable," said Toby Morris, senior trader at CMC Markets.

- Bonuses rise -

The bank's bonus pool for 2013 meanwhile increased 6.0 percent to $3.92 billion on an annual basis.

Frances O'Grady, general secretary of British federation, the Trades Union Congress, said the amount was "yet another example of soar-away boardroom greed".

She added: "It would be great if banks put the same effort into lending to small businesses and investing in infrastructure as they do to getting round EU rules on boardroom bonuses."

While Gulliver's base annual salary will remain at £1.25 million ($2.1 million, 1.51 million euros), he will receive a fixed pay allowance of £1.7 million in shares aimed at avoiding an EU cap on bonuses.

The European Parliament last year agreed to cap bonuses for bankers at the same amount as is paid in a fixed annual salary, or twice that sum if shareholders approve.

But Britain is challenging the law at the European Court of Justice, arguing the bonus ceiling is impractical and would make Europe's banking sector uncompetitive.

HSBC had a global headcount of 254,000 at the end of 2013, after making cost savings of $1.5 billion last year and $4.9 billion since 2011.

"This comfortably exceeded our (three-year) target of US$2.5-3.5 billion and provides good momentum into 2014," Gulliver said on Monday.

There was no update of a worldwide probe into suspected rigging of foreign exchange trading after HSBC was drawn into the investigation last November.

Its performance in 2012 had meanwhile been hit in part by a $1.9-billion fine to settle US allegations of money laundering that were said to have helped Mexican drug cartels, terrorists and Iran.

HSBC was founded in Hong Kong and sees Asia as its main market.