Profits before tax at the group doubled from pounds 861m to pounds 1.7bn last year after reworking the previous year's accounts as if Midland Bank had already been incorporated.
HSBC, formerly known as Hongkong and Shanghai Banking Corporation, has become Britain's biggest bank since it took over Midland last summer, followed by a transfer of the group headquarters to London.
The group's total assets were pounds 170bn at the year end after the addition of Midland, compared with pounds 149bn at Barclays. To rub salt in the wounds, HSBC's profits were larger than the rest of the big five British banks put together, boosted by rapid growth and wide profit margins in its former home base of Hong Kong and by a 24 per cent fall in the pound against the Hong Kong dollar.
However, HSBC revealed a sharp rise in its bad debt provisions against the Olympia and York collapse, from dollars 187.5m at the half year to dollars 450m ( pounds 297m) at the year end. This was 60 per cent of its total exposure of dollars 757.7m.
The provision was based on a fall in market value of shares held as security for loans to O&Y, mainly in the paper and packaging group Abitibi Price and in the Canadian energy company Gulf Resources. HSBC made it clear that a write-back was a possibility if the shares recovered.
The costs of O&Y, pounds 90m of bad debts at a US leasing subsidiary and Midland's bad debts accounted for a pounds 683m increase in HSBC's bad debts to pounds 1,185m.
Asia Pacific dominated the results, producing more than pounds 1bn of the pounds 1.44bn mainstream profits before tax. The balance of the pre- tax profit came from a pounds 270m sale of HSBC's stake in the airline Cathay Pacific.
The final dividend of 14.2p brings the total for the year to 19p, an increase of 50 per cent in sterling terms and 21 per cent in Hong Kong dollars at the year end exchange rate. The rise of the Hong Kong dollar against the pound played a part in boosting the reward for shareholders significantly above the levels indicated at the time of the takeover of Midland.
John Bond, London-based chief executive of HSBC Holdings, refused to be drawn into discussing the latest developments in Hong Kong, but said: 'We hope that a way forward will be found and our experience over the years in Hong Kong, where there have been uncertainties almost every decade, has shown us that they have always been capable of resolution.
'Our long-term perspective on Hong Kong is good. We believe it has an excellent future.'
The investment bank Wardley Group made pounds 40m profit compared with pounds 22m in 1991, but James Capel, the London broker, made only pounds 2.2m, down from pounds 14.2m in 1991.
William Purves, the chairman, said 1992 'was a year of economic stagnation in Europe and the US but strong growth in much of Asia. China's economy grew by 13 per cent and this contributed to buoyant economic conditions in Hong Kong'.
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