HSBC underlying profits up sharply

London: Europe's biggest bank HSBC Holdings Plc said its underlying third-quarter profits were significantly ahead of a year ago and losses on US consumer loans had shown their first fall in three years.

The news sent HSBC stock up over 4 per cent to their highest in just over a year. At 0910 GMT, the shares were up 3.4 per cent at 715.7pence.

In a trading statement yesterday which lacked detailed figures on its quarterly results, HSBC said its investment banking arm had maintained its record performance in the quarter, following bumper performances by rivals including Britain's Barclays.

Margins

It said margins for the Global Banking and Markets arm were not as good in the quarter as they were in the exceptional first half, which benefitted from pent-up demand after the crisis hit at the end of 2008, but said margins were very good compared with previous years, including 2006 and 2007.

In the United States, which has been the focus of market concern, HSBC said loan impairment allowances for its consumer finance business declined, representing the first quarterly fall since the start of 2006 and their lowest level for over a year.

But the bank cautioned it was still too soon to call a turn in US consumer impairments, which hit around $3 billion in the third quarter, though there were positive signs.

"Consensus forecasts [for unemployment, house prices] are moving down from some of the more pessimistic figures...if these things all play out, those would be reflective of turning points. But I don't think anyone is confident to call those yet," Finance Director Douglas Flint said.

Overall loan impairment charges and other credit risk provisions declined in the quarter and were at their lowest quarterly level since the second quarter of 2008.