Global banking giant HSBC faces a massive 17 billion dollar loss on its exposure to the declining US housing market, but the bank says it has managed a record net profit.
LONDON — Global banking giant HSBC said Monday it had to take a massive 17 billion dollar hit on its exposure to the collapsing US housing market and resulting global credit crunch last year but it still managed a record net profit.
Europe's largest bank said impairment losses soared 63 percent to 17.24 billion dollars (11.36 billion euros) in 2007 but net profit rose 21 percent to 19.13 billion dollars as total income increased 25 percent to 87.60 billion dollars.
"2007 was a year when large parts of the international financial system came under extraordinary strain," HSBC group chairman Stephen Green said in comments accompanying the earnings release.
"For HSBC to achieve another new high in earnings, despite these conditions and the exceptionally weak performance of our US business, underscores the value of the strategic focus we announced early last year to drive sustainable growth by concentrating on the faster growing markets of the world."
Pre-tax profit, meanwhile, increased 9.6 percent to 24.21 billion dollars, just shy of analyst consensus forecasts for 24.82 billion dollars.
The improvement was driven by the Asia-Pacific region excluding Hong Kong, where profit for the year jumped 70 percent to 6.01 billion dollars, reflecting strong economic growth in the region, HSBC said.
That outweighed a downturn in the US, where profits slumped to just 91 million dollars from four billion dollars in 2006, held back by rising bad debts as more mortgage-customers defaulted on their loans.
In Monday morning trade, HSBC shares bucked the market, jumping 1.89 percent to 780.50 pence. London's FTSE 100 leading shares index, on which the group is traded, was down 1.35 percent to 5,805.00 points.
Date created : 2008-03-03