The bank saw profits fall 5.5 per cent last year, down from £14.4bn in 2011.
The bank has set aside an extra £1.5bn in 2012 to cover compensation payments for the misselling of financial products, including £1.1bn to cover costs related to the misselling of payment protection insurance and £397m to cover costs relating to the misselling of interest-rate swaps. In total, HSBC has set aside £1.6bn to settle PPI-related claims.
HSBC also had to pay a £1.2bn fine from US regulators last year to settle a money-laundering inquiry.
Total group revenue fell 5.6 per cent from £72.8bn to £68.3bn.
The group’s core tier 1 capital ratio increased from 10.1 per cent in 2011 to 12.3 per cent in 2012.
HSBC’s European division made a £2.3bn loss in 2012, due to a £2.7bn write down in its own debt. The previous year it made a £3bn profit.
In the UK, the bank lent £16.4bn to mortgage customers in 2012, up 24 per cent on the £13.2bn lent in 2011 and £4bn more than its original commitment of £15bn of new mortgage lending in 2012. The bank approved £19bn in total in 2012.
The bank had a 12 per cent share of the UK mortgage market as at the end of 2012, up from 10 per cent a year earlier.
Group chief executive Stuart Gulliver says: “Although reported pre-tax profit fell by 6 per cent to US$20.6bn [£13.7bn] in 2012, underlying profit, which includes the impact of fines and penalties and UK customer redress provisions totalling US$4.3bn, grew by 18 per cent. This was primarily due to revenue growth, notably in global banking and markets and commercial banking, and lower loan impairment charges in North America. We regard this as a good performance.”