HSBC nearly doubles CEO’s pay despite fall in fourth-quarter profits

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Although fourth-quarter profits for HSBC took a hit due to China’s real estate downturn, the bank has increased its chief executive Noel Quinn’s salary by almost two times.

The bank based in London announced on Wednesday that they have agreed on a payment of £10.6m for Quinn. This is a significant increase from the £5.6m he was paid in 2022, due to a long-term bonus in HSBC shares valued at over $5m.

The bank has raised its total staff bonus pool by 12% to $3.8 million.

There was an unexpected decrease in profits during the fourth quarter, with a drop from $5 billion to $1 billion compared to the previous year. This was mainly due to a $3 billion expense related to the lender’s investment in the Bank of Communications in China, as the country’s real estate market is experiencing a downturn and causing difficulties for lenders.

Despite Quinn’s previous suggestion in the last quarter that China had already reached the peak of the crisis, the reality proved otherwise.

During a press briefing on Wednesday morning, the speaker confirmed that they previously stated their belief that the market had reached its lowest point. They still hold this belief and also mentioned that it may take a few years for the market to overcome its current obstacles, clarifying that they did not say the challenges were completely resolved.

“I held the belief that the levels of activity and valuations in the commercial real estate market in mainland China had reached their lowest point and were steadily recovering.”

The announcement caused a 7% decrease in HSBC’s stock on Wednesday morning, making it the poorest performing company on the FTSE 100. This drop puts HSBC on course for its largest daily decline since the beginning of the pandemic in April 2020. During that time, UK regulators required lenders to suspend dividend payments due to concerns about a potential increase in loan defaults caused by Covid lockdowns.

Despite a 78% increase in yearly pre-tax profits, HSBC experienced a rise in interest rates in both Western and Asian markets, where it generates most of its earnings. This allowed the bank to charge higher fees for loans and mortgages to its customers. HSBC’s profits were further boosted by its decision to rescue Silicon Valley Bank UK during the mini-banking crisis in March 2023.

In total, earnings increased to $30.3 billion, compared to $17.1 billion in the previous year and reaching an all-time high. However, this fell short of the predicted $34 billion by analysts.

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The financial institution is getting ready to distribute a dividend of 31 cents per share to its shareholders, bringing the total payout for the year to 61 cents. Additionally, it has announced a share repurchase program that will provide up to $2 billion in funds to its investors.

In a statement, Quinn announced that our company had a very successful year in 2023, resulting in our shareholders being given the largest yearly dividend since 2008. Additionally, we were able to complete three share buybacks totaling $7 billion and plan to do another buyback of up to $2 billion. This achievement is a testament to our dedication over the past four years and the solid financial position we maintain, even in a time of increased interest rates.

“Our main goal is to capitalize on these potential areas of growth, enhance our ability to generate consistent profits, and aim for a return rate of around 15% by 2024,” he stated.


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