HSBC sets new record with £9.2bn annual profit

Union fury over pay as chairman wins 70 per cent rise and five others each take home more than £4.6m

The banking giant HSBC yesterday unveiled the biggest ever profit reported by a UK-based bank but denied it had been made at the expense of British customers. Amicus, Britain's biggest private-sector union, reacted by threatening strike action over HSBC's plans to cut staff bonuses and its "derisory" pay offer.

The banking giant HSBC yesterday unveiled the biggest ever profit reported by a UK-based bank but denied it had been made at the expense of British customers. Amicus, Britain's biggest private-sector union, reacted by threatening strike action over HSBC's plans to cut staff bonuses and its "derisory" pay offer.

The bank's annual report revealed that the pay package of Sir John Bond, the HSBC chairman, rose 70 per cent to £3.6m last year, including bonuses worth £2.4m. Five HSBC employees made more than £4.6m each, with one person pocketing £13.5m.

Group pre-tax profits rose 37 per cent to $17.6bn (£9.2bn) last year, benefiting from benign credit conditions in Europe and the US and boosted by acquisitions, notably the US consumer credit group Household. Less than a quarter of HSBC's earnings came from the UK, where profits excluding goodwill climbed 12 per cent to £3.1bn. That means the bank made £77 in profit from every UK personal customer, it said.

The results followed record profits at Royal Bank of Scotland and Barclays; the industry is expected to tot up a record total of about £30bn by the end of this week. That has sparked renewed calls for a windfall tax on the banking sector. But HSBC said almost one-third of Britons had an interest in its fortunes through shares or pension funds.

Amicus threatened to call on its members at the bank to prepare for strike action after negotiations over a pay dispute stalled. It claimed that out of 25,000 HSBC staff, up to 10 per cent would get no pay rise this year and a further 40 per cent would receive one below inflation. Michael Geoghegan, the head of HSBC's UK arm, said 70 per cent of staff would get pay rises of above 3.5 per cent and less than 2,000 would get no rise.

After the integration of Household, acquired in 2003 for $15bn, the US was the fastest-growing region of the group last year, posting a 45 per cent rise in profits before goodwill to $6.18bn. It has become the bank's largest market, eclipsing Europe where profits grew 27 per cent to $6.17bn.

The bank ruled out large acquisitions in the US and South Korea, where it recently lost out to Standard Chartered in the fierce bidding battle for Korea First Bank. HSBC also announced yesterday that William Aldinger, the former chief executive of Household who heads the US business, would leave on 29 April after the integration of Household proceeded faster than expected. Mr Aldinger, HSBC's second best-paid director with £2.8m, will be replaced by Bobby Mehta, a vice-chairman of Household.

Sir John was upbeat about the outlook for the US economy and rejected criticism from some analysts that the group had lost momentum by reiterating: "This does not feel like a place that has lost momentum." He highlighted China as a key driver of future growth and said the bank would continue to increase its investment there.

HSBC rejected calls for a radical overhaul of Britain's banking system, responding to remarks by Don Cruickshank, a former chairman of the London Stock Exchange, who claimed last week that the payments system had shown no improvement since he submitted a report on banking reform to the Government five years ago.

Douglas Flint, HSBC's finance director, said: "It's a myth that banks make a lot of money out of the float [money held between a cheque being paid in and cleared]. They don't. There are faster systems around the world, all of which we deal with. But just as they are faster at paying money into accounts, they are also much faster at taking it out and since most people write more cheques than they pay in, which do you think they would prefer?"

HSBC's shares closed down 25p at 868p on concern that cost control had been weaker, and bad debts higher, than expected.