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. Last Updated: 07/27/2016

HSBC First-Half Profit Hits $6.11Bln

LONDON -- HSBC Holdings PLC, the world's second biggest bank, unveiled consensus-beating first-half profits Monday thanks to its purchase of Household International, sending its shares to a 13-month high and boosting European markets.

HSBC, based in Britain and with operations around the globe, reported a 21 percent jump in pretax profit for the six months to June 30 of $6.11 billion from $5.06 billion a year earlier.

That compared with a consensus forecast of $5.62 billion, according to the average of seven analysts surveyed by Reuters.

HSBC's shares surged to the top of the FTSE 100 gainers board and by 0920 GMT were up 2.7 percent at 785 pence, earlier hitting a high of 792p, their highest level since June 2002.

The stronger-than-expected profits from HSBC also breathed fresh life into what had been a sluggish London stock market, with the FTSE 100 of leading shares rising 0.8 percent.

HSBC proposed an interim dividend of 24 U.S. cents, up 17 percent.

"The striking thing to me is the dividend. ... A company of this scale putting the dividend up 17 percent is a major event," said Stuart Fowler, fund manager at Axa Investment Managers, adding this showed the board's confidence in HSBC's prospects.

HSBC said it expected savings of $1.2 billion per year from Household International Inc., the second-biggest U.S. consumer-finance company, which it acquired for about $14 billion in March.

The savings comprise $1 billion in cheaper borrowing for Household using HSBC's higher credit rating and $200 million from integrating computer systems and cutting central costs.

HSBC bought Household to boost its presence in the United States and gain Household's expertise in lending to people with patchy credit histories.

Chief executive Stephen Green said the bank will extend the business to Mexico, where it bought GFBital last year, and Europe, where Household has a British arm.

He said the bank will probably develop the business itself in Europe rather than buy consumer-finance companies.

"We will of course look at other European markets," Green said in an interview. "There is enormous scope for us to build."

Green was cautious on prospects for the world economy.

"The U.S. economy has a substantial trade deficit and a fiscal deficit position. Japan is remaining very slow, and the euro zone has some uncertainty over the medium term," he said.

The group's charge for bad and doubtful debts rose to $2.37 billion in the period from $715 million in the same period a year ago, the bulk of which was seen at Household.