HSBC's profits rose 10 percent last year, just below analysts' forecasts, as strong gains in Asia helped Europe's biggest bank absorb a US$17.2 billion hit for bad debts largely due to US housing problems.
The London-headquartered bank reported record pretax profit of US$24.2 billion last year, up from US$22.1 billion in 2006.
This was below an average forecast of US$24.7 billion from a Reuters Estimates poll of analysts, but well within the forecast range.
PHOTO: AFP
The bank's impairment charge jumped US$6.7 billion from 2006, or 63 percent.
Bad debts had been expected to come in at US$15.8 billion, based on the average of forecasts from eight analysts.
HSBC shares were up 0.6 percent at 770.5 pence, the top performing stock in a weak UK share market.
HSBC said that it had suffered an "exceptionally weak" performance in the US, hit by continued deterioration in the US subprime housing market, where it had been a major lender.
But the bank said it had produced "exceptionally strong" results in Asia-Pacific, Latin America and the Middle East.
"The outlook for the rest of 2008 is uncertain," bank chairman Stephen Green said, adding that the US economic slowdown and credit outlook "may well get worse."
But he said that HSBC's conservative balance sheet and international spread left it well positioned and it expects to improve margins and will "continue to invest in building market presence at a time when others with weaker capital positions are constrained."
The bank set new performance targets, including a return on equity of 15 percent to 19 percent over an investment cycle, a cost/efficiency ratio of 48 percent to 52 percent and total shareholder return in the top half of those achieved by its peers.
Profits at HSBC's investment banking arm, which has been renamed global banking and markets, rose 5 percent to US$6.1 billion on strong revenue growth in equities, foreign exchange and other areas.
The unit took a US$2.1 billion writedown on the value of complex financial assets that have been tarnished by the US subprime crisis and turmoil in financial markets.
The writedown was above previous estimates but less than the multibillion dollar hits take by many other banks.
In China, HSBC made profit of more than US$1 billion for the first time, through its own business and in conjunction with associates. Hong Kong profits topped US$7 billion.
The bank recommended a final dividend of US$0.39 per share, taking the full-year payout to US$0.90, up 11 percent from 2006.
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