View from City Road: Midland due for a breathing space

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Superlatives abounded in the HSBC results, probably the largest bank profit in the world this year. The gross dealing profits alone are a bigger number than the pre-tax profits of any of the other British banks.

The dividend rise of 24 per cent was ahead of Lloyds, even without the enhanced scrip issue. With a capitalisation of pounds 24bn - as much as Barclays, NatWest and Lloyds combined - HSBC represents a third of the banking sector, which has been dragged upwards on its coat tails.

Other positive points are that the Hang Seng subsidiary has pounds 843m of unrealised gains on equity holdings and Midland Bank's Third World debt is worth dollars 500m more than book value. The Pacific Basin continues to grow, and profits from Britain and the US are still in an early stage of recovery.

But, as HSBC took pains to explain, it would be rash to expect the same dealing-profits bonanza again - indeed, since the year-end it has cut back its investment in bonds, where many investors have taken a bath after last year's one- way bet went into reverse.

There is no evidence that Midland is at risk in the same way as five years ago, when it lost pounds 250m punting on interest rates, as controls on exposures are much tighter. But profits will be much harder to come by. Tax breaks on Midland and Marine Midland losses have also been used up rather earlier than expected.

This is not, of course, a bank about to do badly - quite the reverse. But it is hard to see the pace of growth being repeated this year. A pause is appropriate for the shares, which rose 7p to 945p yesterday.