HSBC profits up as bad debts show sharp fall

A SHARP fall in toxic debts has raised underlying profits at HSBC during the first quarter of this year, writes Kristy Dorsey.

Europe's biggest bank, which does not disclose full quarterly results, said its bad debts fell to their lowest level for more than two years. There was a particular improvement in the US, helping the business there into profit for the first time since the financial crisis began in 2007.

Overall, underlying profits for the first quarter were "comfortably ahead" of both the same period a year earlier and the fourth quarter of 2009. However, HSBC added that profits at the pre-tax level would be lower, as last year's figure included a $6.2 billion (4.2bn) technical accounting gain.

Chief executive Michael Geoghegan, who recently relocated from London to Hong Kong, hailed the strength of HSBC's Asia-facing business but warned that economies in other parts of the world faced risk.

"From my new base in Hong Kong, the shift from West to East is clearer than ever," Geoghegan said.

"In developed markets, the risks of double-dip recession haven't gone away. In contrast, recovery in emerging markets looks secure."

Shares in HSBC closed up 1.2p at 629.6p.