HSBC has had to set aside more than $1.4bn in order to compensate British victims who were mis-sold payment protection insurance. Money laundering issues have also led to the bank paying out nearly $2bn in fines to the United States.
As a result, HSBC has had a 6% percent decline in annual profits. The bank made a pre-tax profit of $20.6bn (£13.7bn/€15.8bn) in 2012.
According to the bank, the underlying profit rose 18% to $16.4bn. Underlying group revenues also increased 7% to $63.5bn due to a 10% to $18.2bn from its global banking and markets division. The bank was also faced however with $5.3bn accounting charge due to the rising value of its own debt in the financial markets.
The Chief Executive Officer, Stuart Gulliver said “HSBC made significant progress in 2012.”
“Based on our current understanding of the capital rules we are extremely well-placed with regard to Basel III compliance, re-establishing our position as one of the best capitalised banks in the world. This provides a firm base on which to keep growing the business organically and allows us to increase dividends to US$8.3bn”, he added.
The bank has said that Gulliver’s pay for the entire year will total to $7.4m, with a $1.95m bonus although overall bank bonus payments fell back 15% to $2,9bn.
The two major assets which have assisted the bank are the Capital One Financial, the US credit Card division and Ping An, a China-based insurance group. Both together have provided the bank with a further $12bn.