With the annual results season now in full swing, this week it was the turn of HSBC to reveal its profits for 2011. Despite having recently been hit with a record fine of £29.3m for mis-selling PPI, HSBC announced pre-tax profits of £13.8 billion; not only delivering on its profit forecasts but, as one of the biggest profit announcements ever by a UK company, blowing rivals such as Lloyds and RBS out of the water following their recent losses.
Coming hot on the heels of this announcement no doubt, will be intense media scrutiny of Chief Executive Stuart Gulliver’s decision to accept his annual bonus – which saw a cool tripling of his basic £1.25m salary. In the context of a mis-selling scandal and a wider backlash against bankers’ bonuses, many will question whether Gulliver made the right choice.
For HSBC, despite its performance underscoring the success of its new strategy under the stewardship of Gulliver, communicating why such a vast sum was deemed appropriate to the bank’s retail investors now presents one of its biggest challenges.
Undoubtedly, conveying the real value banks such as HSBC deliver to the UK economy will be crucial. It is estimated that the City as a whole contributes around £50m in financial services tax and employs more than a million people, so there is no getting away from the fact we would be worse off without our bankers, bowler hats and all!
But it will take time to re-establish trust in our banking system, with the onus falling squarely on those banks that have turned a profit and avoided the need for a bail-out from the UK tax payer to take the lead in proving their worth to even their most ardent of critics.