HSBC in $17 billion write-down
by Kay Murchie
HSBC’s profit increased 10% last year to $24.2 billion (£12.2 billion), as the UK’s largest bank experienced strong growth in Asia, Middle-East and Latin America. Its results were better than many analysts had predicted.
However, the bank has made a $17.2 billion (£8.7 billion) write-down after the decline in the US housing market hit the value of its loans. The write-down is the largest of the big 5 UK banks because HSBC has large operations in the US.
Chairman Stephen Green said the bank said the global financial system had come under ‘extraordinary strain‘ in 2007. The outlook for the rest of 2008 is uncertain, added Mr Green.
Mr Green continued that the economic slowdown and the credit outlook in the US may well get worse before they get better.
For HSBC to achieve another new high in earnings despite these conditions underscores the value of the strategic focus to drive sustainable growth by concentrating on the fast growing markets of the world, said Mr Green.
HSBC said it is trying to mitigate losses in the US, where defaults on mortgages and credit card payments are increasing. The bank recently cut its US operation with the closure of 400 branches.
In early trading today, shares in the bank were up 0.6% at 770.5 pence, the best performing stock in a weak UK share market.
Richard Hunter from stockbrokers, Hargreaves Lansdown, said HSBC has performed better than many of its competitors in shedding just 14% of its share price in the last 12 months.
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