HSBC profits slump by 19% as Asian crisis hits

PROFITS AT HSBC slumped 19 per cent to $6.57bn last year as worsening problems in Asia forced the world's biggest bank to raise its bad debt provisions by $1.62bn to $2.64bn - its highest level ever.

John Bond, the HSBC chairman, said the bank was badly hit in the second half by problems in Malaysia and in Hong Kong, where he is predicting zero growth this year.

He said that while he remains confident of Asia's prospects in the long term, he could not rule out the possibility of "further setbacks" this year.

The bank has also witnessed a sharp deterioration in its loan portfolios in Thailand and Indonesia, although in Korea, where the group yesterday sealed a $900m deal to buy control of Seoul Bank, HSBC believes the worst may now be over.

Mr Bond said: "The year ahead promises to to be another challenging year and much will depend on the performance of the US economy and its ability to continue a remarkable record of sustained growth."

In Hong Kong new specific provisions rose by $689m reflecting the collapse in the property market. For Asia-Pacific generally, provisions were increased by $1bn to cover exposures to large corporates in Malaysia, Indonesia and Thailand.

HSBC announced plans to seek a New York listing in addition to its current dual listings in London and Hong Kong. The bank is also scrapping its two-tier share structure and replacing the current Hong Kong dollar and sterling shares with one class of US dollar denominated stock. HSBC will, for the first time in its history, be seeking authorisation to buy back its shares.

HSBC yesterday denied suggestions that the decision to go for a US quote signalled that the bank was limbering up for a major American banking deal.

Mr Bond said the New York listing would give the bank access to the largest pool of capital in the world and enhance the liquidity of the bank's shares.

HSBC has suffered considerable share price volatility in the past because of technical shortages in Hong Kong dollar denominated stock.

The move should also increase the proportion of US institutional shareholders on HSBC's register.

Mr Bond said the bank was seeking to learn the lessons of last year's losses by tightening up on credit control procedures and centralising risk control.

The group has set itself a target of doubling total shareholders return within five years. The group will "benchmark" itself against a peer group of nine major international banks including Citigroup, Lloyds-TSB, Deutsche Bank and Chase.

It is also taking a $180m provision to cover the cost of relocating staff from its 12 sites around the City of London to its new home in Canary Wharf.

Bill Dalton, the chief executive of Midland Bank, which is being rebranded as HSBC, said that the tough year in Asia "was a strong vindication" of HSBC's decision to buy Midland in 1992.

While at group level the rise in bad debt provisions more than wiped out the growth at operating level, in the UK, Midland reported a 7 per cent rise to pounds 1.745bn.

That was despite a pounds 60m provision to cover the impact of the pensions review and a pounds 72m rise in bad and doubtful debts. With these and other one-offs stripped out underlying profits were up 22 per cent, Mr Dalton said.

Midland contributed 38 per cent of profits, up from 31 per cent last year, taking over from Hong Kong Bank for the first time as the largest single profits generator within the group.

John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing

Other places that have held independence referendums
Jonas Gutierrez (r) competes with Yaya Toure (l)

Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result

Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'

Actors star in Woody Allen's 'Magic in the Moonlight'

peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's most starring part

Watch this commuter wage a one-man war against the Circle Line
We are phenomenally good at recognising faces; the study showed that humans have been selected to be unique and easily recognisable

Human faces unique 'because we don't recognise each other by smell'

Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
ebooksAn unforgettable anthology of contemporary reportage
A male driver reverses his Vauxhall Astra from a tow truck

Man's attempt to avoid being impounded heavily criticised

Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
The Guildhall School of Music and Drama is to offer a BA degree in Performance and Creative Enterprise

Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week