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HSBC says FY profits rose 5 percent in 2006 |
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Written by Neil Simmons
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Monday, 05 March 2007 |
LONDON - Europe's biggest bank, HSBC has announced a 5 percent rise in 2006 profits to $22.08 billion but added that bad debt has rose more than expected last year.
The bank said that its U.S subsidiary HSBC Finance Corporation's disastrous performance has led to sluggish profits compared to its other rivals. It also said that the bank would be forced to write off over $11 billion due to its "misadventure" in the U.S mortgage market.
Group Chairman Stephen Green was upbeat about the bank's performance saying, "It is a testament to HSBC's strength and diversity that we grew pretax profits in 2006 to $22 billion, despite a major setback in part of our mortgage business in the United States."
However an area of concern for the bank is rising bad debt. The bank posted a $10.6 billion hit for bad debt, 20 percent more than expected. The bank added that bad debt was more prominent in recent loans. The bank also announced a restructuring program to make sure that its U.S arm will not have to take a risk once again.
In a statement the bank said, "We are restructuring this business to avoid any repetition of the risk concentration that built up over the past two years".
Share prices rose by 0.9 percent to 894 pence, valuing the bank at 103 billion pounds. The bank raised the dividend for the year by 11 percent to 81 cents a share.
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