Bank profits up to £11.5bn

Banking giant HSBC saw profits rise 5% to 22.09 billion US dollars (£11.48 billion) today but counted the costs of increased bad debts in its US mortgages operation.

The bank has been hit by bad debt charges of 10.57 billion US dollars (£5.49 billion) after highlighting growing problems with US borrowers defaulting on mortgages in a shock profits warning last month.

Despite the US problems, HSBC's profit performance brings the combined pre-tax profits posted by the "big five" banks to £37.3 billion in the past two weeks.

The 10.57 billion US dollars (£5.49 billion) charge represents a 35% hike on last year's 7.8 billion US dollars (£4.05 billion) provision for bad debts.

Profits in the US division's personal business fell by 725 million US dollars (£376.9 million), caused by a portfolio of sub-prime mortgages bought by US consumer finance subsidiary Mortgage Services.

The head of HSBC's US division, HSBC Finance chief executive Bobby Mehta, resigned two weeks ago.

HSBC chief executive Stephen Green said: "It is a testament to HSBC's strength and diversity that we grew pre-tax profits to 22 billion US dollars, despite a major setback in part of our mortgages business in the United States."

In the UK, the bank boosted pre-tax profits by 13% to £1.87 billion, with bad debts down 3% to £796 million.

The company's UK chief executive Dyfrig John said the bank had kept its bad debt levels flat despite a sharp increase in personal insolvencies.

Mr John said the group had tightened up its lending requirements and expected to increase its refusal rates from around 20-22% to 30%.