HSBC profits surge
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Hongkong and Shanghai Banking Corp, HSBC's main Asia unit, reported net profit of $3.3 billion last year.
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LONDON, England (Reuters) -- HSBC Holdings, the world's second-biggest bank by market value, posted annual profit up 33 percent on Monday, matching expectations, driven by its takeover of U.S. lender Household.
Pre-tax profit jumped to $12.816 billion from $9.65 billion a year earlier, the bank said in a statement. The consensus forecast was $12.91 billion, according to the median estimate of 10 analysts polled by Reuters, with a range of $12.4 billion to $13.3 billion.
HSBC's $14.8 billion acquisition of Household in 2003, its largest ever, and its expansion in Mexico accounted for 70 percent of the profit jump.
HSBC shares were down 0.63 percent at 869 pence in early trade. The stock has gained eight percent in the past six months and is the fourth-best performer of the UK's 11 listed banks.
Provisions for bad debts rose to $6.093 billion from $1.321 billion a year earlier, largely in line with expectations, with almost all the rise due to Household.
The Household deal transformed HSBC, boosting its presence in north America and bringing it high-margin consumer lending, but it also made HSBC a riskier investment by adding borrowers with bad credit records and increasing bad debt provisions.
HSBC said Household's credit quality improved in the second half of 2003 and said there were grounds for optimism that this trend would continue in the first half of 2004.
HSBC is almost the last of the UK commercial banks to report results for 2003. Lenders' profits have been buoyed by consumer borrowing and corporate bond activity amid low interest rates.
HSBC's profit figure is the largest reported by a British bank, topping the 6.16 billion pounds ($11.5 billion) announced two weeks ago by Royal Bank of Scotland. The bank recommended an interim dividend of 60 cent a share, an increase of 13 percent.
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