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

HSBC has nearly doubled the pay packet of its chief executive, Noel Quinn, despite a drop in fourth-quarter profits, which took an unexpected hit from its exposure to China’s real estate downturn.

The London-headquartered lender disclosed on Wednesday that it had settled on a $10.6m (£8.4m) package for Quinn, marking a significant rise from the $5.6m he received for 2022, thanks to a long-term bonus in HSBC shares worth more than $5m.

The bank also increased its overall bonus pool for staff by 12% to $3.8m.

It came amid a surprise drop in fourth-quarter profits, which fell to $1bn from $5bn a year earlier, due primarily to a $3bn charge linked to the lender’s stake in the Bank of Communications in China, where lenders are struggling with a downturn in the country’s real estate market.

That was despite Quinn having suggested last quarter that China had experienced the worst of the crisis.

“I did say last quarter that I thought the market had bottomed. I still believe that,” he told a press briefing on Wednesday morning. “I also said last quarter that it will take a few years for the market to work its way through the current challenges. So I didn’t say challenges were over.

“But I did believe the activity levels in the commercial real estate market, the valuations in the commercial real estate market in mainland China had bottomed, and that what I saw was a progressive and gradual recovery in the market.”

However, HSBC reported a 78% rise in annual pre-tax profits, having benefited from rising interest rates in both the west and Asia – where it makes the bulk of its earnings – allowing it to charge its customers more for loans and mortgages.

HSBC’s profits were also flattered by its emergency rescue of Silicon Valley Bank UK during the mini-banking crisis in March 2023.

Overall, profits rose to $30.3bn, up from $17.1bn a year earlier. However, that missed analyst estimates of $34bn.

The bank is preparing to pay shareholders another dividend worth 31 cents a share, taking its total payout for the year to 61 cents. It also is planning a share buyback that will hand up to $2bn to investors.

Quinn said in a statement: “Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008, three share buybacks last year totalling $7bn, and a further share buyback of up to $2bn. This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment.”

“We are focused on capturing these growth opportunities, improving our earnings sustainability and targeting mid-teens returns in 2024,” he added.