HSBC has increased its bankers’ bonus pool by 50% after profits grew by more than fourfold in the second quarter thanks to an economic rebound in key markets including the UK.
The London-headquartered bank said it had put aside $900m (£650m) to compensate its star bankers in the first half of the year, up from $600m during the same period in 2020 when its profits suffered from the onset of the Covid crisis. Its top bankers will have another six months to increase the bonus pool, before it is paid out next spring.
HSBC said the jump in banker payouts reflected the lender’s strong performance, as pretax profits swelled to $5bn in the three months to 30 June, up from $1bn a year earlier when it put aside billions of pounds to cover potential defaults linked to the pandemic.
The bank said improving economic forecasts, particularly in the UK, meant it could release $284m worth of loan loss provisions, compared with the $3.8bn it had put aside to cover potential bad debts during the same period in 2020.
“Economic forecasts have improved as countries emerge from the Covid-19 pandemic, although uncertainties remain as countries respond at different speeds, government support measures unwind and new virus strains test the efficacy of vaccination programmes,” the bank said.
Regardless of the uncertainty, the bank confirmed it would pay its investors a dividend worth 7 US cents a share, making it the latest UK lender to take advantage of looser Covid rules around shareholder payouts.
The Bank of England ordered the UK’s largest banks not to pay any cash bonuses to senior staff and to suspend dividend payments last year to preserve capital and ensure lenders could support the British economy in case of a massive economic downturn.
“These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy,” said the HSBC chief executive, Noel Quinn.