The dealing bonanza, a tally that excludes the expenses of running the operation, was bigger than the City had expected and took the group's pre-tax profits to pounds 2.584bn.
This was 51 per cent higher than in 1992 and substantially exceeds the combined profits of National Westminster and Lloyds.
The increase in dealing profits of pounds 468m was less than the boost to group pre-tax profits because costs such as salaries also rose.
The jump in dealing profits was mainly due to Midland Bank, which made pounds 585m in the markets compared with pounds 225m a year earlier. Of this total, about pounds 380m came from investments in bonds and other securities whose value rises as interest rates fall, compared with pounds 100m a year earlier.
HSBC pointed to better business volumes and favourable trading conditions, but profits were also boosted by the integration of its dealing operations into Midland Global Markets. The contribution of foreign exchange to group dealing profits fell pounds 6m to pounds 377m.
Sir William Purves, chairman, warned that with interest rates at or near the bottom, it was unlikely treasury and capital market dealing profits would be as good this year.
John Bond, group chief executive, said HSBC's investment in debt securities - up from pounds 15bn to pounds 26bn in the past year - was cut back at the start of 1994. The markets turned down in January.
Group bad debt provisions rose pounds 168m to pounds 1.158bn because of increased provisions by Midland and Concord Leasing, a US subsidiary that made a bad debt charge of pounds 160m against its aviation business, up from pounds 98m in 1992.
But provisions fell at HongkongBank and Hang Seng and there was a release of past bad debt provisions in Marine Midland, the New York subsidiary. A further pounds 125m was set aside for a court award against Samuel Montagu, the merchant bank sued by the administrators of British and Commonwealth over the sale of Exco.
The dividend was raised 24 per cent to 23.5p, well ahead of Lloyds Bank's 20 per cent, and with an enhanced scrip dividend the value rises to 24.75p. But this failed to boost the share price significantly: it rose 7p to 945p.
Hongkong Bank, boosted by rapid growth in the Far East, raised its attributable profits 15 per cent to pounds 1.19bn. But the 1992 result was inflated by the disposal of an investment in Cathay Pacific, without which the growth would have been 57 per cent.
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