HSBC profit up as Asia offsets writedowns
Europe’s biggest bank HSBC said its profit in the first quarter was ahead of a year ago as growth in Asia helped counter over $5 billion in hits from bad debts on US home loans and asset writedowns.
LONDON: Europe���s biggest bank HSBC said its profit in the first quarter was ahead of a year ago as growth in Asia helped counter over $5 billion in hits from bad debts on US home loans and asset writedowns. HSBC said it was likely the US economy will go into recession this year and a recovery in the US housing market was unlikely until at least 2009, but its trading statement was more positive than those from many banks battered by the credit crunch. The bank said on Monday its bad debt charge related to its US consumer finance business was $3.2 billion for the first quarter and it wrote down almost as much for a deterioration in the value of risky assets. HSBC will report interim results on August 4.
Its latest US home loan impairment charge was in line with expectations and down from $4.6 billion in last quarter but double the level of Q1 of 2007 as problems in the subprime housing market work through its loan book. HSBC shares were up 1.9% at 882 pence as of 4:40 am.���Group profit up on Q1 2007 ... is a claim few banks in Europe will be able to make,��� said Alex Potter, analyst at Collins Stewart.
Underlying revenue growth, the scale of writedowns on assets and profits at HSBC Finance were all better than expected, he said.HSBC said it was satisfied with the progress it is making in running down its US mortgage book and tackling bad debts, but HSBC chief executive Michael Geoghegan predicted an improvement in the US housing market will be ���a 2009 event��� and won���t occur this year.���It is a slowing (in bad debts) rather than a stopping,��� Geoghegan said.
���We don���t know whether that is a slowing because the economy is improving or whether it is a seasonal thing. I suspect it is more seasonal,��� he added, saying tax rebates and other issues could distort the situation this year.
HSBC said its underlying revenue growth in the first quarter was ���comfortably ahead��� of a year earlier, even after absorbing a $2.6 billion writedown in its global banking and markets (GBM) investment banking unit.
Group revenue growth remained positive after also excluding a $2.7 billion gain on the fair value of debt it carries on its own books. It said most of this gain reversed in April, however.
Underlying cost growth during the quarter was modest, it said, and its capital ratios remained broadly in line with those at the end of 2007.
It increased profits in all major countries in which it operates in Asia-Pacific, the Middle East and Latin America. GBM���s profits were ahead of the previous two quarters on the back of a strong emerging markets focus, it said.
(Reporting by Steve Slater and Clara Ferreira-Marques; Editing by Quentin Bryar and Jason Neely)
Reuters journalists are subject to the Reuters Editorial Handbook which requires fair presentation and disclosure of relevant interests.
Its latest US home loan impairment charge was in line with expectations and down from $4.6 billion in last quarter but double the level of Q1 of 2007 as problems in the subprime housing market work through its loan book. HSBC shares were up 1.9% at 882 pence as of 4:40 am.���Group profit up on Q1 2007 ... is a claim few banks in Europe will be able to make,��� said Alex Potter, analyst at Collins Stewart.
Underlying revenue growth, the scale of writedowns on assets and profits at HSBC Finance were all better than expected, he said.HSBC said it was satisfied with the progress it is making in running down its US mortgage book and tackling bad debts, but HSBC chief executive Michael Geoghegan predicted an improvement in the US housing market will be ���a 2009 event��� and won���t occur this year.���It is a slowing (in bad debts) rather than a stopping,��� Geoghegan said.
���We don���t know whether that is a slowing because the economy is improving or whether it is a seasonal thing. I suspect it is more seasonal,��� he added, saying tax rebates and other issues could distort the situation this year.
HSBC said its underlying revenue growth in the first quarter was ���comfortably ahead��� of a year earlier, even after absorbing a $2.6 billion writedown in its global banking and markets (GBM) investment banking unit.
Group revenue growth remained positive after also excluding a $2.7 billion gain on the fair value of debt it carries on its own books. It said most of this gain reversed in April, however.
ADVERTISEMENT
Underlying cost growth during the quarter was modest, it said, and its capital ratios remained broadly in line with those at the end of 2007.
It increased profits in all major countries in which it operates in Asia-Pacific, the Middle East and Latin America. GBM���s profits were ahead of the previous two quarters on the back of a strong emerging markets focus, it said.
(Reporting by Steve Slater and Clara Ferreira-Marques; Editing by Quentin Bryar and Jason Neely)
ADVERTISEMENT
�� Thomson Reuters 2008. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.Reuters journalists are subject to the Reuters Editorial Handbook which requires fair presentation and disclosure of relevant interests.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
