The banking giant, which is heavily exposed to the troubled Asian region, reported a 14 per cent drop in pre-tax profits to $3.69bn (pounds 2.23bn). HSBC has set aside an additional pounds 700m in provisions for bad and doubtful loans.
John Bond, group chairman, said it was "difficult to predict" when the stricken Asian economies would recover. However, Mr Bond said the group's confidence in Asia's long-term prospects remained strong.
At a press conference in London, Keith Whitson, HSBC's chief executive, stressed the group's commitment to Asia, although he admitted the bank was taking a more cautious approach in the region. "We have changed the pace of the strategy of building personal banking in Asia, but not the direction," he said.
Mr Whitson said the group had no plans to exit investment banking, despite intense media speculation earlier this year. He said: "We have absolutely no intention of selling or divesting our investment banking activities." Attributable profits at HSBC Investment Banking fell by 6 per cent to $154m.
Attributable profits at the UK's Midland Bank rose by 12 per cent to pounds 550m, although they were tempered by a pounds 60m pension mis-selling charge and a poor first half in the treasury division. Midland's net margin fell from 2.73 per cent to 2.61 per cent, partly because of "the impact of competitive pressures", reported the group. However, Mr Whitson said there was as yet no evidence of a deterioration in credit quality at the UK bank.
HSBC is keeping an open mind on acquisitions, according to Mr Whitson. He said: "We are well placed to take advantage of opportunities." However, he cautioned that the group had "very exacting" acquisition criteria.
Shares in HSBC group fell by 33p to 1,490p.
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