HSBC profits soar as bad debts decline

2nd Aug 2010 09:48

HSBC gave a signal that the banking sector may be returning to normality after the credit crisis as it posted interim profits that more than doubled on the back of a sharp reduction in bad debts. In the half year to June 30, the bank saw pre-tax profits jump to US$11.1bn (£7bn) from $5bn (£3.2bn) over the same period the previous year. It said that loan impairment charges and other credit risk provisions fell to their lowest levels since the start of the credit crisis, falling by $6.4bn to $7.5bn. It added that it has been profitable in every region it operates in apart from North America where it saw losses of $80m.The bank's retail and commercial businesses made a profit of about $4.3bn in the first half compared with around $1.2bn a year ago.Shares in HSBC rallied after the results, with fellow banks RBS and Lloyds, which are due to report their results this week, climbing in sympathy. HSBC said it was building a strong customer base and is establishing a strong leadership position in emerging markets such as India, China, Vietnam and Kazakhstan. 'Despite increasing economic uncertainty towards the end of the period, we saw appetite for credit grow steadily, especially among our business customers,' said chief executive Michael Geoghegan. 'This is now feeding through into lending growth, a trend we expect to continue.'Elsewhere, French rival BNP Paribas reported a better-than-expected 31% rise in second-quarter net profit. Net profit for the three months to July rose to €2.1bn up from €1.6bn a year earlier.