HSBC Posts 10% Rise in Profit

LONDON -- HSBC's profits rose 10 percent last year as strong gains in Asia helped Europe's biggest bank absorb a $17.2 billion hit for bad debts largely due to U.S. housing problems.

The London-based bank reported record pretax profit of $24.2 billion for 2007, up from $22.1 billion in 2006.

The bank's impairment charge jumped $6.7 billion from 2006, or 63 percent.

HSBC said it suffered an "exceptionally weak" performance in the United States, hit by continued deterioration in the U.S. subprime housing market, where it had been a major lender.

But the bank said it had produced "exceptionally strong" results in Asia-Pacific, Latin America and the Middle East.

"The outlook for the rest of 2008 is uncertain," said Stephen Green, the bank's chairman, noting the U.S. economic slowdown and credit outlook "may well get worse."

But he said HSBC's conservative balance sheet and international spread left it well positioned and it expects to improve margins and will "continue to invest in building market presence."

Profits at HSBC's investment banking arm, rose 5 percent to $6.1 billion due to strong revenue growth in equities, foreign exchange and other areas.

The unit took a $2.1 billion writedown on the value of complex financial assets that have been tarnished by the U.S. subprime crisis and turmoil in financial markets. The writedown was above previous estimates.