Bad debt soars at HSBC
Banking giant HSBC has today announced that pre-tax profit in the first quarter of 2009 was down compared with the same period in 2008, due to higher bad debts.
However, the bank received $6.6 billion (£4.4 billion) from the higher book value of its debt, which meant its profits at the underlying level increased.
The bank, which is Europe’s largest, described its results as “encouraging” but shares fell almost 4% following the news.
Commenting on the results, Stephen Green, group chairman, said: “The future macroeconomic environment remains highly uncertain and signals from the broader economy are very mixed. Economic activity remains unusually depressed in spite of interest rates at historically low levels globally“.
Mr Green adds: “However, US consumer spending has held up well and business sentiment has improved in recent months. Asia has proven resilient, with China and India continuing to grow robustly, particularly China, where stimulus initiatives have clearly had a direct domestic impact. There are also signs that financial markets may be regaining some of their appetite for risk.”
Michael Geoghegan, chief executive, described the bank’s first-quarter operating performance as “encouraging” and said it was well-placed to weather the economic uncertainty and will expand through opportunities.
The results follow on from Barclays who last week reported a 15% rise in pre-tax profits for the first quarter, while Royal Bank of Scotland reported a pre-tax loss of £44 million for the period against a profit of £479 million for the same period in 2008.
Meanwhile, Lloyds Banking Group has warned that it expected to make a loss this year.
Returning to HSBC, unlike some of its rivals the bank has so far turned down financial help from the Government.
Furthermore, the bank has chosen not to participate in the Government‘s asset protection scheme, which insures against losses arising from toxic assets.
Visited 2225 times, 1 so far today
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.