The hit came from the bank’s exposure to China’s real estate downturn, resulting in a 78% decline in quarterly profits, falling to $1 billion (around £0.8bn) from $5bn (around £4bn) a year earlier. This decline was primarily attributed to a $3bn (around £2.4bn) charge linked to the bank’s stake in the Bank of Communications in China.

The bank increased its overall bonus pool for staff by 12% to £3m ($3.8m). The news led to a 7% drop in HSBC shares, making it the worst-performing stock on the FTSE 100. This setback is poised to be the largest daily drop since the early days of the pandemic in April 2020, The Guardian reports.

Despite the challenges in China’s real estate market, Mr Quinn expressed optimism about a gradual recovery, emphasizing that he believed the market had bottomed. However, market sentiment led to a significant drop in HSBC shares.

Despite the challenging quarter, HSBC reported a 78% rise in annual pre-tax profits, benefiting from rising interest rates in both the west and Asia, where it generates the majority of its earnings. Annual profits reached a record high of $30.3bn (around £24bn), up from $17.1bn (around £13.6bn).

Commenting on the results, Mr Quinn said: “Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008, three share buy-backs last year totalling $7bn, and a further share buy-back of up to $2bn. This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment.

“We have a strong platform for growth with the opportunities that exist within our two home markets and across our international wholesale, market-leading transaction banking, and wealth management businesses. We are focused on capturing these growth opportunities, improving our earnings sustainability and targeting mid-teens returns in 2024.”

The bank is set to pay shareholders a dividend of 31 cents per share (around 25 pence per share), bringing the total payout for the year to 61 cents (around 41 pence). Additionally, HSBC plans a share buyback, allocating up to $2bn (around £1.6bn) to investors.