HSBC has unveiled its largest bonus pool in 14 years after annual profits came in ahead of City expectations, handing bankers a $3.9bn windfall as the group accelerates its strategic overhaul.

The FTSE 100 lender increased total variable pay by 10 per cent year-on-year, taking the 2025 bonus pot to its highest level since $4.2bn was distributed in 2011. The uplift comes despite a 7.4 per cent fall in annual pre-tax profits to $29.9bn, a figure that nevertheless beat analyst forecasts of $28.9bn.

Profits were weighed down by $4.9bn in one-off charges, including $1.4bn in legal provisions and a $2.1bn impairment linked to its stake in China’s Bank of Communications.

Chief executive Georges Elhedery said the bank was benefiting from “strong momentum” and defended the bonus rise as part of a drive to embed a “high performance culture”.

“It’s a culture where talent and performance are better rewarded,” he said.

Elhedery himself received a £14.4m pay package for the year, up from £13.2m previously.

Since taking the helm, Elhedery has embarked on a sweeping restructuring designed to simplify the bank and cut costs. HSBC now expects to achieve $1.5bn in savings by the end of June, six months earlier than originally planned.

Headcount fell to 208,720 at the end of last year from 211,304 the previous year, reflecting thousands of job reductions across the group.

The bank is also deepening its focus on Asia, where it generates the bulk of its profits. It recently completed a $13.6bn transaction to take full control of its Hong Kong-focused subsidiary, Hang Seng Bank.

HSBC said it expects to generate $900m in benefits from Hang Seng by 2028, including $500m in synergies. Elhedery said any duplication arising from the takeover would be managed through redeployment rather than widespread redundancies.

Alongside the bonus announcement, HSBC confirmed it would return $7.71bn to shareholders through a 45-cent-a-share dividend. Shares rose 5 per cent in early London trading following the results.

The combination of stronger-than-expected earnings, accelerated cost savings and a renewed focus on its core Asian markets appears to have reassured investors, even as the bank navigates geopolitical tensions and ongoing restructuring costs.

For staff, the enlarged bonus pool signals a return to more generous payouts, and underlines Elhedery’s determination to reward performance as HSBC seeks to sharpen its competitive edge.

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HSBC staff share $3.9bn bonus pot as profits top forecasts