HSBC posts �13.8bn annual profit

RAPID growth in Asia and a resilient performance in the UK helped drive profits of �13.8billion at HSBC today.

Profits rose 15% to 21.9 billion US dollars, which is among the biggest ever reported by a British company and close to its record of 24 billion US dollars set in 2007.

The banking giant, which makes an estimated 90% of its money outside Britain and has benefited from its exposure to emerging markets in Asia, said UK pre-tax profits rose 17.2% to �1.5 billion.

Chief executive Stuart Gulliver is to be awarded a total pay package of up to �6.7 million for 2010 as his �2 million salary and allowances will be boosted by a �2.2 million bonus and other long-term incentives.

The final element will be in shares and cannot be sold until he retires or leaves HSBC.

HSBC’s performance was lifted by a 12% rise in revenues in Asia, Latin America and the Middle East and North Africa, which now account for 49% of its revenues, while its commercial banking arm enjoyed record pre-tax profits of 7.9 billion US dollars (�5 billion) up 31% on the previous year.

It comes after state-backed Lloyds and Royal Bank of Scotland reported hefty losses, while Barclays reported a fall in profits.

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Mr Gulliver said 2011 was “a year of major progress for HSBC”. He said: “We recorded a strong performance in faster-growing markets and had a record year in commercial banking. I am pleased with our progress but there is a lot more to do and we remain focused on delivering our targets.”

In the UK, HSBC met its Project Merlin targets agreed with the Government on lending to businesses in 2011, as loans to commercial customers hit a record high.

It loaned �49.4 billion to businesses, exceeding its target of �38.8 billion, with �11.9 billion going to small and medium-sized enterprises (SMEs), which was slightly higher than its target for a 15% increase on the previous year.

It aims to approve 80% of applications from SMEs in 2012 and is to launch a �4 billion fund to help SMEs in the UK to trade with other businesses overseas in coming weeks.

The group also increased mortgage lending in the UK by 12% to �13.2 billion, giving a 9.6% share of the market, up from 2.5% in 2007, and expects to loan �15 billion to homeowners in 2012, with �3 billion specifically for first-time buyers.

UK retail banking head Joe Garner said: “Despite the ongoing challenging economic conditions, during 2011 HSBC used its unique international strength to lend record amounts to both UK businesses and individual customers, and, critically, our net lending to businesses grew against a backdrop of a shrinking market.”

Impairment provisions for bad loans in the UK as a whole were down a third to �796 million.

The group, which is based in London, said it paid 1.5 billion US dollars (�944.7 million) of tax in the UK, equivalent to about two-thirds of the profits made in the UK bank.

There are fears that the bank may uproot its head office to Asia after the Government announced a costly shake-up of the industry, which will force banks to separate their retail and investment banking arms.