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HSBC profits take a dive in credit crisis aftermath

Latest update : 2008-08-04

British-based bank HSBC's profits fell by an expected 28% in the first half of 2008 as losses associated with the US mortgage crisis kept swelling.

LONDON - Europe's biggest bank HSBC Holdings said its first-half profit fell 28 percent, in line with analysts' forecasts, as a $14 billion hit on bad debts on US home loans and asset writedowns countered strong Asian growth.

HSBC said pretax profit in the six months to the end of June were $10.2 billion, down from $14.2 billion a year before. The average forecast in a Reuters poll of seven analysts was $10.1 billion.

By 0905 GMT HSBC's London-listed shares were down around 1 percent at 829 pence.

The bank said the outlook for economies was "highly challenging" after deteriorating progressively in the first half. It predicted growth in emerging markets would hold up "reasonably well, albeit with less momentum than in the recent past".

"Ultimately the real economy will recover from this crisis, although it may get worse before it gets better," HSBC Chairman Stephen Green said in a statement.

The bank's impairment charge was $10.1 billion for the six months, up 58 percent from a year ago, mainly due to losses from its book of US mortgages.

Its investment bank also wrote down $3.9 billion on its exposure to credit trading, monolines and leverage acquisition financing loans. Profits in Global Banking and Markets fell 35 percent from a year before to $2.7 billion.

Date created : 2008-08-04

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