Asia growth offsets bigger writedowns at HSBC
HSBC has been forced to take a larger writedown in its global banking and markets business in the first quarter than it took for the whole of last year after taking a $2.6bn (€1.7bn) hit on its credit-related portfolios, but it said this morning that growth in emerging markets helped counter the bad news.
Writedowns in the global banking and markets division for the first three months of the year were up $500m on the total for 2007, which HSBC blamed on the “continued credit market disruption”.
The writedown figures came in an interim results statement which did not contain revenue or profits figures for the division.
However, it did say that pre-tax profits from the operation were lower than for the same period last year, but were up on the previous two quarters, with the bank’s emerging markets businesses, particularly those in Asia and the Middle East offsetting the credit market writedowns.
HSBC’s sub-prime writedown at $500m was half the amount written-off in 2007, but credit trading writedowns nearly doubled to $1.1bn, while writedowns from derivative transactions with monoline bond insurers more than doubled to $700m.
The bad news in the global banking and markets business was offset by gains in the value of HSBC’s own debt, which increased by $2.7bn, while the bank also reported a “significant” increase in income from its investments in Chinese financial groups Ping An Insurance, Bank of Communications and Industrial Bank.
Michael Geoghegan, chief executive of HSBC, said: “I am encouraged by the way we have increased pre-tax profits in every one of the major countries in which we operate in Asia-Pacific, the Middle East and Latin America.”
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