HSBC reveals jump in profits

HSBC's head office in London

HSBC remained resilient in the face of rising bad debts with improved profits and record results in its global banking arm for the first quarter of 2009.

The banking giant reports its revenue grew in the first three months of the year, with profit “well ahead” of the same period last year.

Although HSBC declined to reveal its exact figures in its update to investors, it did confirm that its performance was boosted by its rights issue in April, which saw 97% of investors take up its offer of new shares.

Michael Geoghegan, group chief executive officer of HSBC, says the bank’s performance this year has been encouraging. 

"The rights issue enhanced HSBC's signature financial strength and this, together with the start made to 2009, means we are well-positioned to ride out the economic uncertainty ahead, and to take advantage of opportunities to grow," Geoghegan adds.

HSBC says its personal finance arm remains “resilient” but that it is facing pressure from squeezed margins and an increase in the number of borrowers missing payments. However, Geoghegan says that demand for credit – from mortgages to credit cards – has been "subdued".

Heavy losses on sub-prime mortgages (for people with bad credit history) that have gone bad have also forced HSBC to shut down much of its US consumer lending business.

And Europe’s biggest bank added that loan impairment charges and credit risk provisions were higher than the same period the previous year but down from the last three months of 2008. The group wrote down a total of $24.9 billion in 2008.

However, debts in the US were "slightly lower than expected".

In contrast, its Asian operations proved went from strength to strength while its global banking and markets division saw record first quarter results amid strong trading in foreign exchange and interest rates.

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