There was strong speculation in the City that SBC's London bond-trading operation had suffered badly. SBC blamed the larger-than-expected fall in profits on difficult market conditions for bonds and interest rate instruments. On Monday HSBC, Midland Bank's parent, said it had ceased all bond-trading for its own account after a near- pounds 500m drop in first-half dealing profits.
SBC said it had performed above expectations in trading in European equities, while results from bond and interest rate instruments were below forecasts.
The unexpected rise in US interest rates in February was the culprit, despite a 14 per cent growth in volumes for foreign exchange, interest rate and other derivative products in the first half.
Six-month consolidated pre- tax profits, fell 36 per cent to SFr438m. SBC said the environment in the first half compared badly with bumper securities markets in 1993 when it reported a 36 per cent group net profit increase to SFr1,365m from 1992.
In 1993, SBC reported provisions of SFr2,770m, up 44 per cent from 1992.
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