HSBC defies sub-prime hit for record profits

3 March 2008

Despite being hit with $17.2 billion in bad debts, HSBC has been able to achieve a ten per cent rise in profits and has even increased its shareholder dividend.

Europe's biggest bank announced a record-breaking profit of $24.2 billion before tax for 2007, although it disappointed Reuters analysts who had expected $24.7 billion.

However, profits were up from $22.1 billion in 2006 and annual underlying profit growth was five per cent, as broadly expected.

Much of the money was made in foreign countries, with the bank's US results unsurprisingly weak given the sub-prime crisis. In 2007, HSBC only saw a profit of $91 million from its North American operations.

The bank's operations in Hong Kong saw a 42 per cent increase in profits, totalling over $7 billion, while the rest of Asia was 70 per cent more profitable for HSBC than the previous year.

Analysts said that HBSC's policy of diversification, spreading into China, India and Hong Kong were an antidote to the US sub-prime troubles.

In morning trading, shares in HSBC had risen by 0.8 per cent, bringing the bank's market value to around $181 billion.

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