Emerging markets boost HSBC profit

HSBC Holdings Plc, Europe's biggest bank by market value, said second-half profit rose 17 percent as emerging-markets lending overcame subprime losses on customers in the United States.

Net income increased to $8.24 billion, or 69 cents a share, from $7.1 billion, or 62 cents, a year earlier, beating analysts' estimates, the London-based company said yesterday. HSBC wrote down $2.1 billion of asset-backed securities, leveraged loans and holdings guaranteed by bond insurers in 2007 and raised its dividend by 11 percent to 90 cents.

HSBC boosted earnings in fast-growing markets including China and India and reduced its dependence on the US. Chairman Stephen Green named Brendan McDonagh last month to head the US unit after scaling back riskier loans and closing units to control bad debts, which spread to credit cards and unsecured loans. Bad loans rose to $17.2 billion in 2007, more than the $10.6 billion in 2006, the company said.

"They look to be a good set of numbers," said Simon Maughan, a London-based analyst at MF Global Securities Ltd with a "buy" rating on the stock. "The US is worse than expected, and everywhere else is pretty much better than expected."

HSBC rose 1.4 percent to 776.5 pence in London trading at 8:35 am. The bank is down 7.9 percent this year, valuing it at 92 billion pounds ($182 billion). The FTSE All-Share Bank Index has fallen 9.8 percent.

Pretax profit rose 5 percent to $10.1 billion. The company reported a $2.34 billion loss in North America, down from a profit of $927 million.

Profit before tax surged 43 percent to $2.67 billion for the Asia Pacific excluding Hong Kong, 35 percent to $4.5 billion in Europe, and from 35 percent to $1.18 billion in Latin America.

Agencies

(China Daily 03/04/2008 page17)