Sir Peter Walters, chairman, said the results represented Midland's progress towards normal levels of profitability. But the bank, acquired earlier this month by the Hongkong and Shanghai banking group, had a long way to go and was still suffering from the continuing recession.
'The depressed level of economic activity has reduced overall balances, new lending opportunities and money transmission activity, and thus interest and commission income,' Sir Peter added.
In the six months Midland made provisions for bad and doubtful debts of pounds 355m, compared with pounds 530m in the first half of 1991 and pounds 373m in the second.
Of the total bad debt charges, pounds 322m occurred in domestic operations. Personal bad debts declined, though still at a historical high, while corporate bad debts were virtually unchanged.
Net interest income fell 5 per cent from a year ago to pounds 830m and other operating income fell 5 per cent to pounds 762m. Costs were kept under control at pounds 1.2bn, down a few percentage points.
In a continued rationalisation of branch banking, Midland staff numbers declined by 1,323 against the same time last year and were 442 lower than at year-end.
Ninety-eight branches were closed in the first six months of the year, but that rate is expected to slow in this half.
The UK operation, which lost pounds 170m in the first half and pounds 15m in the second half of 1991, made a pre-tax profit of pounds 10m.
Within UK banking, Forward Trust, the finance house, made a pre-tax profit of pounds 25m compared with pounds 15m in the first half of 1991.
Pre-tax profits fell to pounds 37m in the merchant bank Midland Montagu due to increased bad debt charges, lower corporate finance fees and reduced foreign exchange trading. It made pounds 71m pre- tax in first-half 1991.
Thomas Cook, the travel agency being sold to LTU Group and Westdeutsche Landesbank for pounds 200m in October, reported a pre-tax profit of pounds 13m, the same as the second half last year. The bank estimates an extraordinary profit of pounds 67m from the sale.
Midland's total capital ratio declined to 9.8 per cent from 10.3 per cent at year-end because of a Bank of England requirement on revaluation of properties.
No Midland dividend was paid, but shareholders will receive the interim dividend declared by HSBC Holdings on 25 August.
Midland shares were unchanged at 467p with HSBC sterling shares 1 1/2p lower at 335 1/2p.