BANKING group HSBC said yesterday
a resilient performance
had helped lift first-quarter profits,
despite an extra £3bn in credit
crunch losses.
The bank, which also saw its
UK share price rise on the back of
its announcement, took the losses
on bad debts from its US consumer
finance business and
write-downs on mortgage-backed
investments hit by the financial
turmoil.
HSBC said it had increased pretax
profits in all major emerging
markets, such as Asia and the
Middle East, but added that the
outlook for this year was unusually
difficult'' to predict and
said a US recession was increasingly
likely''.
HSBC chairman Stephen
Green said the bank's global presence
and range of businesses
are allowing us to support our
customers in today's challenging
market conditions''.
The update was also well-received
by investors, with shares
in the bank's London Stock Exchange
last night closing up 16p
at 882p.
Mr Green was upbeat after
record quarters for the group's
commercial banking and private
banking division, despite the
continued problems in the US
business HFC.
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HSBC said it saw higher losses
across its US business as the
economy veers towards recession,
although bad debt levels
were in line with management
expectations.
Chief executive Michael
Geoghegan said the pace of
growth in bad debts had slowed,
but that could be because of seasonal
factors.
Last year, the bank's total bad
debt and credit provisions hit
£8.7bn. But the bank remained
gloomy on the prospects for the
US housing market, where defaults
among borrowers shattered
confidence in investments
based on the loans last summer,
sparking the credit crisis.
In a statement, the bank said:
It seems likely that the deterioration
in the US housing market
will extend into 2009.
"There is an increased likelihood
of a recession this year.''
In the UK, HSBC said it had lifted
profits at its retail banking
business due to lower costs than
last year, when it returned millions
in overdraft fees to customers.
The company has focused on
growing its savings deposits in
the UK but launched a bid to
boost its share of the mortgage
market last month with its ratematching''
offer.
HSBC has attracted customers
by offering to match their existing
fixed-rate deals for two years,
although they have to have a 20
per cent deposit and pay a fee for
the deal.
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