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March 2, 2010

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HSBC sees net profit up 2% to US$5.8b

HSBC Holdings Plc, Europe's largest bank, yesterday reported full-year profit rose 2 percent as sharply lower operating costs helped offset an increase in loan impairment charges.

For the year ended December 31, the bank made an after-tax profit of US$5.8 billion, compared with US$5.7 billion a year earlier. Operating expenses fell 30 percent to US$34.4 billion.

Pretax profit fell 24 percent to US$7.08 billion, well below the analysts' consensus of US$11.5 billion, the bank said.

Impairment charges on bad loans rose from US$24.9 billion to US$26.5 billion. Operating income, a measure of revenue, fell 11 percent to US$78.6 billion.

"The initial share price performance has mirrored some mild disappointment with the numbers, which had been subject to high expectations," said Richard Hunter, analyst of Hargreaves Lansdown Stockbrokers.

The bank talked up its underlying pretax profit of US$13.3 billion, up US$4.7 billion from 2008. The underlying figure excludes the effects of currency movements, acquisitions and disposals.

"This improvement was largely driven by stronger results across our Global Banking and Markets businesses, where we saw exceptional revenues, considerably stronger balance sheet management performance, and a significant decline in writedowns compared with 2008," said CEO Michael Geoghegan.

"It also reflected a significant fall in loan impairment charges in our United States consumer finance portfolios, offset by higher loan impairment charges elsewhere."

Geoghegan plans to donate his US$6 million bonus to charity, the bank said.


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