HSBC posts record profits of $22bn
HSBC, the biggest bank in Europe and a major supplier of UK current accounts, has posted a 5% rise in profits to a record $22.08bn (£11.5bn).
The figures were widely expected by banking analysts and within the range of market expectations, and came against a background of very tough conditions in the US market.
HSBC reported that provision for bad debt in 2006 will be in the region of £5bn – a fifth higher than expected – because of the slowing housing market in the US. The bank has taken some big hits on American mortgage defaults.
HSBC chairman Stephen Green said that the growth in profits was “a testament to the strength and diversity” of the bank, a comment endorsed by HSBC’s tie-up with Indian bank Canara Bank.
“These are massive figures but not out of range of our expectations,” said City analyst Colin Perry. “We are talking about the second biggest bank in the world here and a huge supplier of UK current accounts, for example.”
Richard Hunter, head of UK equities at Hargreaves Lansdown, also sounded positive on the announcement. “The collective sigh of relief in response to these numbers was reflected by an early uptick in the share price, very much against the flow of the market,” he said.