The FINANCIAL — HSBC, the U.K.'s largest bank, said full-year net income rose 2% to $5.8 billion, below analysts' expectations of $6.4 billion.
Loan impairment charges and other credit risk provisions rose to $26.5 billion in 2009 compared with $24.9 billion the previous year, the company said, according to Bloomberg. Pretax profit in Hong Kong declined to $5.03 billion from $5.46 billion, and fell 11 percent in the rest of Asia-Pacific to $4.2 billion. “Huge challenges and risks remain for all of us,” said Chairman Stephen Green in the statement.
The bank plans to trade its shares in Shanghai and moved Chief Executive Officer Michael Geoghegan to Hong Kong from London last month to sharpen its focus on Asia, the same source reports. HSBC halted consumer finance loans in the U.S. after racking up provisions of at least $70 billion in the past four years following its acquisition of U.S. subprime lender Household International Inc.
Profits were dented by a $6.3 billion technical accounting loss on the value of its own debt, more than the $5 billion expected by analysts. Underlying profit before that loss was $13.3 billion, up 56 percent, according to Reuters. HSBC's Global Banking and Markets investment banking arm saw pretax profit for the year rise to $10.5 billion from $3 billion a year earlier thanks to improved market conditions.
Net trading income was $9.86 billion, up from $6.56 billion. HSBC was one of the first lenders to raise the alarm about problems in the U.S. subprime mortgage market, late in 2006, The Wall Street Journal reports. It went on to take tens of billions of dollars in impairment charges against the U.S. consumer finance business, which it bought in 2003.
According to the same source, thanks to its exposure to Asian economies, however, HSBC been able to report strong results in a time U.K. peers continue to suffer from the recession-hit U.K. economy.