Profits take hit at HSBC

Britain's biggest bank HSBC today said profits so far this year had suffered after it took a further hit from the financial crisis.

The group said pre-tax profits in the nine months to September were below last year, although it added that third-quarter profits were higher than a year ago.

Its battered investment banking business took a 600 million US dollar (£383m) credit crunch writedown, while it also saw bad debts in its US business rise by 700 million dollars (£447.5m) over the quarter to 4.3 billion US dollars (£2.75bn).

HSBC said it was braced for even higher impairment charges as credit trends worsened.

The US business is being impacted by rising borrower defaults amid increasing levels of unemployment as the world's biggest economy slides into recession.

In the UK, bad debts also rose in the three months to the end of September, although it said loan impairments had reduced in the year to date.

HSBC added that writedowns in its investment banking arm - which is seeing 4% of its global workforce cut - would have been £835 million higher had it not been for an accounting change.

Michael Geoghegan, group chief executive, said the banking industry was facing "extraordinary times".

The group said it had not been immune to the global financial crisis and faced challenges as the global economic slowdown gathered pace.

Growth in its key Asian market had helped offset bad debts in the third quarter, but HSBC confirmed there were signs of slowdown in the region.

Fast-growing Asia has until now helped protect HSBC from the balance sheet turmoil seen by its rivals.

The bank has not been forced to ask for taxpayer cash under the Government's £37 billion bank bail-out, instead transferring cash from other parts of the business to boost its capital strength.