The UK’s largest bank reported pre-tax profits of $21.9 billion (£13.8 billion), up from $19 billion (£12 billion) in 2010, aided by a windfall of $3.9 billion (£2.46 billion) from favourable fair value movements on its own debt.
The results were bolstered by 12 per cent growth in revenues from Asia, Latin America, the Middle East and North Africa (MENA).
These growth markets now make up 49 per cent of HSBC’s revenue, although the firm also attributed much of its 10 per cent rise in costs to higher staff costs in those markets.
The firm claimed a record year for its commercial banking division, which saw a 31 per cent pre-tax profits increase to $7.9 billion. However, this was partially offset by a 24 per cent pre-tax loss in its global banking and markets division.
Despite the profit rise, and a note from broker Seymour Pierce which reiterated its ‘buy’ recommendation and 800p target, shares in HSBC took a hit this morning, currently trading down 2.44 per cent at 560.9p at 10.40am.
HSBC chief executive Stuart Gulliver, who embarked on a series of cost-cutting measures when he was appointed last year, declared 2011 to be ‘a year of major progress for HSBC’.
He explained, ‘We gained traction in our strategy designed to simplify the structure and improve the management and control of the group, thereby improving returns and positioning HSBC for growth.
‘We recorded a strong performance in faster-growing markets and had a record year in commercial banking.
‘I am pleased with our progress but there is a lot more to do and we remain focused on delivering our targets.’
HSBC is following the lead set by Lloyds last week by clawing back bonuses from executives for the mis-selling of investment products, after it was hit by a £10.5 million fine from the Financial Services Authority for convincing elderly customers to pour their savings into risky investments.
The bank is also the first to comply with new Treasury rules to publish details of the top eight highest paid executives, who took home £30 million between them in 2011.
The full details about executive directors’ pay were also included in the results and showed that Gulliver took home £7.15 million last year through a combination of his £1.25 million basic salary and various bonus and incentive plans.