HSBC profit rises

HSBC Holdings, Europe's biggest bank, reported a 5 percent rise in 2006 pretax profit to a record $22.1 billion on Monday but it suffered a $10.6 billion hit for bad debts after problems in its US mortgage lending.
HSBC, which has about 125 million customers world-wide, saw its profit rise from $21 billion in 2005 but the result was below an average forecast of $22.4 billion in a poll of analysts by Reuters Estimates.
The bank, which generates the bulk of its revenues in Europe, North America and Hong Kong, said it had enjoyed strong growth in Asian business in 2006. Both its global private banking and investment banking operations showed strong growth.
HSBC, with headquarters in London, said there had been no deterioration in its troubled US mortgage lending since it warned about the impact of the deepening problem a month ago, and said it was confident it would not spread to other areas. By 1320 GMT HSBC shares were up 0.45 percent at 889 pence, valuing the bank at 102.6 billion pounds ($197 billion).
The bank warned on February 7 that problems had deepened in its lending to lower quality US home borrowers, resulting in the steep jump in bad debts charge and prompting it to oust the head of its North America operations and restructure the business.
Bad debts in Europe, which are mostly in the UK, rose 12 percent on the year to $2.2 billion. Underlying bad debts in the UK were up 8 percent from 2005, in line with its lending growth, and bad debts in the UK retail bank were near flat on the year.
HSBC said its group impairment charge was up $2.8 billion, or 36 percent, from 2005, and the "major setback" had caused a $725 million drop in its US personal finance profits. The bank's CIBM investment bank arm posted a 12 percent rise in profits to $5.8 billion, aided by buoyant capital markets, although the unit's profit growth slowed from 37 percent in the first half. HSBC said its income rose 14 percent to $70.1 billion, matched by a 14 percent rise in cost growth.
Its costs as a ratio of income nudged to 51.3 percent from 51.2 percent in 2005.enters India's insurance market.
BANGALORE: British banking giant HSBC Holdings on Monday tied up with Bangalore-based Canara Bank and another Indian lender to set up a life insurance business, entering a market fuelled by rising incomes and the absence of a social security system.
State-owned Canara will hold a 51 percent stake in the venture, initially capitalised at two billion rupees (45 million US dollars), with HSBC taking 26 percent and New Delhi-based Oriental Bank of Commerce the rest, Canara's general manager S. Jayararam told AFP.