The largest European bank HSBC has seen its full year pre-tax profit more than double in 2010 to $19 billion (£11.8 billion) from $7.1 billion, reported in 2009.
Losses arising from bad debts more than halved to $14 billion in 2010 from $26 billion recorded in 2009. The results, however, fell short of market expectations driving the stock down by 4 percent.
The bank had also cut chief executive Stuart Gulliver’s annual package to £6.2 million in 2010 from £9.8 million in 2009.
Mr. Gulliver’s annual package contains £5.2 million in shares, which is staggered and will be released over a period of time. HSBC is one of the largest firms in the world and its market capitalisation exceeds the combined market value of RBS, Lloyds and Barclays.
Commending the bank’s performance, the recently appointed Mr. Gulliver said the bank has made “a good start to the year”.
Some analysts however, remain skeptical about Mr. Gulliver’s claim that the bank has been profitable in every region and every customer group for the first time since 2006.
Cormac Leech, an analyst with investment bank Canaccord said: “The underlying pre-tax profit is significantly disappointing”.
HSBC faces “further pressure on margins, particularly in its important Asian region”, said Richard Hunter of Hargreaves Lansdown, adding that the banks return on equity has been lower.
“Given that these high hopes have been somewhat dashed again, it remains to be seen whether the current market view of the shares as a buy remains intact”, he added.
Tougher capital requirements will dent its Return on Equity (RoE) in 2011, HSBC warned. The revised target reflects the difficult global environment and tougher capital requirements, said new finance director Iain Mackay.
“We’ve targeted 12% to 15% through the cycle for return on equity, principally taking into consideration what we view as a somewhat unstable and uneven economic recovery over the coming years as well as much higher capital requirements”, Mr. Mackay said.
Mr. Gulliver said Asia remains one of the most important markets for the bank adding “as a globally-connected bank with a growing presence across the world’s faster-growing regions, HSBC also benefited from higher trade volumes and strong momentum in emerging economies, especially in Asia”.
The London headquartered HSBC survived the economic crisis without receiving any government bailout money like its rivals RBS and Lloyds.