This was an increase of $2.4bn on last year, which was attributed to making progress in running off its consumer mortgage and lending portfolio in North America, with the improvement in loan impairment charges more than offsetting the decline in revenue.
The business, excluding this run-off, benefited from lower UK customer redress charges while in global private banking, legacy issues and a repositioned business model and client base reduced the profit figure by $700m.
Operating costs for wealth management were $149m.
The group reported a pre-tax profit of $22.57bn over the year to 31 December 2013, up from $20.65bn last year.
Earnings per share and dividends per share were 84p and 49p respectively, compared with 74p and 45p in 2012. Return on equity was 0.8% higher than last year at 9.2%.
HSBC’s capital position strengthened with its core tier 1 ratio increasing to 13.6%. It said it remained well-placed to meet expected future capital requirements and would continue to review the evolution of the regulatory environment.
“We continued to demonstrate our ability to generate capital to grow our business and to support our progressive dividend policy, cementing our status as one of the highest dividend payers in the FTSE,” said Douglas Flint, group chairman.
He added: “Sustainable success in banking is founded upon meeting the expectations of society. Fundamentally, this means delivering transparent and fair outcomes to our customers. It also means avoiding any perception of self-interest by ensuring there is a proper division of value between providers and consumers of financial products and services.
“While regulatory changes seek to address the framework supporting these outcomes, responsibility and accountability rest with the industry itself, and ultimately with the management and boards of individual institutions. We understand this and strive to be seen as proactively responsive to rising expectations. We made good progress in 2013 in this regard. In particular, we redesigned the compensation frameworks in Retail Banking and Wealth Management around the customer, so that from the start of 2014 we have removed the link between financial reward opportunity and product sales for substantially all of our staff in our retail and wealth businesses.”
Flint said 2014 marked the beginning of a new phase of strategic implementation, continuing the work started in 2011.
In May, the group reaffirmed its return on equity target to 12-15% and announced three strategic priorities for the next three years.
These included growing the business and dividends progressively, recycling risk-weighted assets from lower return to higher return parts of the group.
It said if it was unable to deploy the remaining capital that provided value to shareholders, it may seek to neutralise the effect of scrip dividends through share buybacks, subject to regulatory and shareholder approval.
It also sought to implement its ‘Global Standards’ programme and in addition had ambitions of delivering a further $2-3bn of sustainable savings through streamlining its processes.
“These priorities are essential to realising our vision of establishing HSBC as the world’s leading international bank,” Flint added.
Retail Banking and Wealth Management includes personal banking products and wealth management services, including insurance and investment products, global asset management services and financial planning services.
