HSBC boss in charity pledge as profits fall 24%

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The Independent Online

HSBC boss Michael Geoghegan confirmed today that he will hand up to £4 million of his bonus payouts to charity.

The group said it made 13.3 billion US dollars (£8.8 billion) in underlying pre-tax profits last year, up from an adjusted 8.6 billion dollars (£5.7 billion) in 2008.

Its chief executive said he would pass on his £4 million bonus entitlement - which will be paid in deferred shares - to charities around the world over the next three years.

On a reported basis, HSBC's results showed a 24% slide in annual profits to 7.1 billion dollars (£4.7 billion) after one-off factors and write-downs on the value of its assets.

But with these stripped out, HSBC saw a marked improvement thanks largely to a 148% surge in profits for its investment banking arm, HSBC Global Banking and Markets.

The bank's five biggest earners will take away bumper pay packages from the year's improved performance, earning a combined £35 million in bonuses last year, according to its annual report published alongside today's results.

Britain's public purse will benefit to the tune of 355 million dollars (£234 million) in payments under the Government's one-off bonus tax.

Mr Green pledged an end to the days of guaranteed bonuses under an overhaul of the bank's pay policies, which will also see less reliance on bonuses and an increase in basic salaries as a proportion of total remuneration.

"We have witnessed unacceptable distortions - from rewards linked to unsustainable or illusory day one revenues, which encouraged risk-taking; to multi-year guaranteed bonuses with no performance criteria," he said.

He added: "Remuneration must be firmly tied to sustainable performance and must not reward failure."

The bank has weathered the financial crisis well compared with many rivals, avoiding direct taxpayer support, although it did tap shareholders for £12.9 billion to bolster its balance sheet.

It suffered hefty bad debts as a result of a lending binge during the housing market boom on both sides of the Atlantic.

The group shed more than 23,000 jobs in 2009 in a bid to save costs as bad debts raced higher.

HSBC reported another increase in borrower bad debts and impairments in 2009 - up 9% to 26.5 billion dollars (£17.5 million).

However, it said its badly hit US consumer finance business saw a 16% fall in bad debts and predicted a further fall in 2010 as unemployment is expected to ease back.

In the UK, underlying earnings fell 37% to 10 billion US dollars (£6.6 billion).

The bank said it grew its share of the net new mortgage market, although its figures suggested there was little relief for first- time buyers as its home loans were on average made with deposits of at least 45%.

Shares fell more than 3% today as its reported profits figure came in lower than many analysts were expecting.

The figure was hit largely by a technical accounting loss on the value of HSBC's own debt in 2010.