22 February 2024 , 10:05
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HSBC has announced record-breaking annual profits and nearly doubled the salary for its boss, but its share price has fallen after it revealed that its finances have been affected in recent months due to its connections with China's struggling property market.
The bank reported that its pre-tax profit soared by almost 80% to top 30.3 billion US dollars (£24 billion) in 2023, up from 17.1 billion dollars (£13.6 billion) the previous year. This increase was aided by higher interest rates which have raised the cost of borrowing, leading to larger earnings for the UK's biggest lenders.
In its yearly report, the bank also disclosed that the pay package for chief executive Noel Quinn nearly doubled last year. He earned £10.6 million, up from £5.6 million in 2022, mainly due to a £5 million long-term bonus in HSBC shares that he received during the year.
HSBC bankers also shared bonuses worth 3.8 billion US dollars (£3 billion), a rise of 12% compared with the previous year. However, HSBC admitted that its earnings were impacted in recent months because of issues facing China, the world's second-largest economy.
Most of the bank's profits are made in Asia, even though its global headquarters are in London. Its pre-tax profit dropped by 4.1 billion US dollars (£3.3 billion) to one billion US dollars (£800 million) in the last three months of the year, compared with the same period the year before.
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HSBC's fall was due to a three billion-US dollar (£2.4 billion) loss linked to its stake in Bank of Communications, a Chinese bank. Chinese banks have been hit hard by a downturn in the country's commercial real estate market, leaving many developers with growing debts.
HSBC shares fell by about 7% on Wednesday morning after the unexpected fourth-quarter loss. However, Mr Quinn said he remains "confident on the economy in China" and that leaders are working to boost the economy.
"I did say last quarter, I thought the market had bottomed. I still believe that," he told reporters on Wednesday. I also said last quarter that it would take a few years for the market to work its way through the current challenges so I didn't say the challenges were over."
Mr Quinn also mentioned his pay package is based on the bank's performance. "As you can see from the numbers, 2023 was a very strong performance, and that is reflected in my own personal renumeration," he said.