HSBC sets European earnings record

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The Independent Online

The banking giant HSBC today set a new European record for half-year earnings after profits rose 53% to £5.14 billion in the first six months of 2004.

The banking giant HSBC today set a new European record for half-year earnings after profits rose 53% to £5.14 billion in the first six months of 2004.

The improvement, which was ahead of market expectations, reflects a full contribution from Household, the US consumer finance arm it acquired in 2003.

In Europe, where HSBC generates around a third of its earnings, profits before exceptional items stood at £1.68 billion for the half-year.

Group chairman Sir John Bond described the figures as a "solid performance", reflecting revenues growth and a disciplined management of costs.

Sir John said the current environment remained favourable: "Although trading conditions in our global markets business in the second quarter were less buoyant than in the first, there are no obvious signs of significant deterioration."

HSBC shares, which had been trading in negative territory ahead of today's results, rose 2% or 19p following the better-than-expected figures.

In the UK, HSBC said it had bolstered its presence in the UK mortgage market with record sales and 18% growth in balances.

The company added: "The UK economy was resilient, with employment levels remaining strong. Interest rate rises during the first half appear not to have dampened consumer confidence."

Today's figures show HSBC achieved profits of 2.29 billion US dollars (£1.26 billion) in the UK, against 1.67 billion US dollars (£916.1 million) a year ago.

Areas of improvement included card lending, where balances grew by 20% due to a continued spending boom among consumers and a series of promotional campaigns.

A number of new products were also introduced into the buoyant housing market, in which HSBC is attempting to build its presence. The company's share of the UK mortgage market is currently in the region of 3%.

Michael Geoghegan, chief executive of the UK business, declined to comment on speculation that HSBC may improve its position further in the sector by making a bid for Abbey National.

Today's figures come two months after HSBC said it was cutting 3,000 office jobs as part of a drive to improve efficiency and streamline its product range. It also said it would recruit an additional 1,000 customer-facing staff.

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