• Profits fall 6 percent to $20.6bn
  • Bonus pool down 15 percent to $2.9bn
  • CEO Gulliver nets $7.4m total 2012 pay deal
  • Shareholder returns slip to 8.4 percent from 10.9 percent
  • Core Tier 1 improves to 12.3 percent from 10.1 percent

HSBC posted a 6 percent decline in full year profits after the banPk set aside more than $1.4bn to compensate British customers who were mis-sold payment protection insurance and paid nearly $2bn in fines to US authorities over allegations of money laundering.

Europe's biggest bank said profits before tax hit $20.6bn (£13.7bn/€15.8bn) in statement published Monday on its website. The figure is well shy of analysts' estimates and represents a 6 percent decline from 2011. Underlying profit, the bank said, rose 18 percent to $16.4bn, the bank said. Underlying group revenues increased 7 percent to $63.5bn, HSBC said, thanks to a 10 percent increase (to $18.2bn) from its global banking and markets division. On a reported basis, revenues fell 5 percent to $68.33bn. HSBC was also hit by a $5.2bn accounting charge against the rising value of its own debt in the financial markets.

"HSBC made significant progress in 2012," said CEO Stuart Gulliver in the statement. "First and foremost, we grew our business. We increased revenues, performed well in most faster-growing markets and enjoyed a record year in Commercial Banking. We've made the business easier to manage and control by disposing of non-core businesses and surpassed our sustainable savings target. We also agreed a settlement with the US and UK authorities in respect of our past anti-money laundering and sanctions failings. Based on our current understanding of the capital rules we are extremely well-placed with regard to Basel III compliance, re-establishing our position as one of the best capitalised banks in the world. This provides a firm base on which to keep growing the business organically and allows us to increase dividends to US$8.3bn."

HSBC will increase its dividend by 10 percent from 2011 levels, the bank said, paying the equivalent of $0.45 per share in ordianry dividends and a fourth "interim" payment equivalent to $0.18 per share.

Since taking over as CEO in 2011, Gulliver has been relentless in his aim of trimming the bank's balance sheet and cutting costs in order to increase shareholder returns. He's sold or closed 47 separate business units and plans to eliminate some 30,000 staff worldwide in an effort to increase savings by around $3.5bn before the end of this year. HSBC said 26 non-core disposals took place in 2012 and it expects at least four more in the 2013 financial year.

Two major assets sales this year - US credit card division Capital One Financial and China-based insurance group Ping An - have netted the bank around $12bn. The sales will help to offset the $1.9bn in fines HSBC was forced to pay US authorities in December of last year after a Senate investigation found evidence of more than a decade of lax controls it said linked HSBC to money-laundering, terrorist funding, tax evasion and financial ties to Iran that violate US sanctions.

The bank said Gulliver's pay will total $7.4m for the year, including a £1.95m bonus. Overall bonus payments for the bank fell 15 percent to $2.9bn, HSBC said.

Shareholder return on equity, a key measure of performance for bank investors, fell to 8.4 percent from 10.9 percent in 2011, the bank said. The bank's core tier one capital ratio, a measure of the amount of money the bank needs to set aside to protect savers and investors from potential losses, improved to 12.3 percent from 10.1 percent in the previous year, HSBC said.

HSBC shares feel around 3 percent in London trading to change hands at 705.9 pence each. The shares have risen around 8.5 percent so far this year.