HSBC announces 24% fall in profits

1 March 2010

Banking giant HSBC saw its pre-tax profits tumble 24% in 2009 despite record earnings at investment banking arm.

Europe's biggest bank saw pre-tax profits slip from $7.1 billion from $9.3 billion due to accounting losses. However, its underlying pre-tax profit rose 56% to $13.3 million - at the lower end of analyst expectations.

Like its rivals, HSBC continued to feel the effects of bad debts, which climbed 9% on the previous year to $26.5 billion. However, its troubled US consumer arm saw a 16% drop in loan impairments with HSBC adding these are expected to fall further in 2010.

Within the group, improved market conditions lifted the performance of its global banking and markets division. Pre-tax profits came in at $10.5 billion compared with $3 billion in 2008. Write-downs were down $5.1 billion on the previous year.

HSBC added its commercial banking division saw an improvement in every region despite economic challenges.

Chief executive Michael Geoghegan says: "These results were ahead of our expectations at the outset of the year and they underscore the resilience of HSBC through the most difficult stages of the economic cycle. In particular, our improved underlying performance highlights the strength of our diversified business model."

However, the group warned that 2010 is "likely to be another difficult year for developed markets".

Geoghegan forecasts a two-speed recovery with economies in emerging markets set to grow by more than 6% while the developed world struggles to hit 2%.

"Emerging markets are now increasingly in the driving seat. The centre of economic gravity will continue to move east and south, and so will the opportunities for growth in financial services."

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