HSBC 'won't cut and run' as profits poised to reach £12bn

HSBC will pledge its long-term commitment to the Middle East this week when it completes the big banks' reporting season with a near-trebling in profits.

The bank is the most geographically diverse of Britain's big four and is expected to state unequivocally that it remains committed to its Middle East operations despite the rising death toll and widespread political upheaval in Libya, Egypt and Bahrain.

The bank has a long-standing presence in the region, with operations in many countries, including Egypt, Bahrain, Algeria, Jordan, Kuwait, Lebanon, Oman and Iraq. It also has a representative office in Libya and an associate banking company in Saudi Arabia.

One banking source said: "HSBC are not going to cut and run. It's worth noting that during other regional crises, for example the Asian financial crisis in 1997 and Argentina in 2001, HSBC remained open for business." HSBC declined to comment.

The bank's results tomorrow will be the first presented by new chief executive Stuart Gulliver, formerly head of investment banking before last autumn's boardroom shake-up, and new Scots-born chairman, Douglas Flint, previously finance director.

Gulliver's predecessor, Michael Geoghegan, said HSBC was "completely committed" to the Middle East at the time of the debt crisis in Dubai and United Arab Emirates in 2009. "I am confident that the leadership of Dubai and the UAE will overcome any short-term issues they face, which appear to have been somewhat sensationalised," he said at the time.

Gulliver is expected to adopt a similar tone that HSBC is in its many territories - from the US and Europe to Africa and the Far East - for the long haul and will not be thrown off course by short-term violence and volatility.

City analysts will be interested to see whether the bank's Middle East's trading improved in 2010 after what it admitted was a "very difficult" 2009, when profits from the region fell sharply to $455m from $1.7bn.

An improvement in bad debts is expected to outweigh revenue pressures flagged up by the bank at the third trading quarter to allow it to unveil a headline pre-tax profit for 2010 of over $19 billion (12.3bn). That compares with a $7bn (4.3bn) profit in 2009, while bad debts are expected to have fallen to $14.5bn from $26.5bn in 2009.

Ian Gordon, banking analyst at HSBC, said: " The big jump in profits will be mainly down to lower impairment charges across all HSBC's six territories and all divisions."

Gordon added: "There could be further incremental disappointment on revenues, however."