HSBC Holdings (HSBC.L) slashed profits targets today, despite declaring pre-tax profits for 2010 of US $19 billion, up from US $11.96 billion for the full year of 2009.

The global banking group raised its shareholder dividend, confirming a final dividend of 12 cents for 2010, up from 10 cents the previous year.

However, the bank noted that new regulatory commitments - governing the amount of capital organisations should hold – would eat into profitability and it lowered its targets for the coming year.

Stuart Gulliver, chief executive of HSBC Holdings, admitted that the bank has had to review its targets now that the effect of the new rules has become clearer.

He explained, ‘Now that we have better visibility on the impact of increased capital requirements, we believe that higher costs of the evolving regulatory framework will, all other things being equal, depress returns for shareholders of banks. We will therefore target a return on average shareholders' equity of 12-15 per cent in the future.’

The announcement was a revision downward from the 15-19 per cent that was originally envisaged.

Gulliver reiterated the inconvenience of the new government bank levy that would also result in an extra deduction from the UK-domiciled bank’s balance sheet.

He added, ‘As the proposed levy is to be applied to the consolidated balance sheet, it applies beyond the legal boundary of the domestic institution to include overseas operations conducted through separately capitalised subsidiaries.

‘This, therefore, constitutes an additional cost of basing a growing multinational banking group in the UK.’

HSBC's share price was down 4.5 per cent at 679 pence (1030 hrs) on the news.