HSBC sees record profits of $22bn

HSBC has hit record profits despite tough times in the US

HSBC, Europe's biggest bank, has reported a 5% rise in profits to a record $22.08bn (£11.5bn).

The profit rise was within the range of analysts' expectations, but came against a backdrop of tough conditions in the US.

HSBC said bad debt provisions for 2006 would be about $10.5bn (£5bn) as a result of the slowing housing market in the US.

The bank is facing substantial bad debts because of US mortgage defaults.

Global spread

HSBC chairman Stephen Green said the growth in profits in the face of the US situation was "a testament to the strength and diversity" of the bank.

The collective sigh of relief [in response] to these numbers was reflected by an early uptick in the share price, very much against the flow of the market Richard Hunter, Hargreaves Lansdown See HSBC's share price Should we cheer or jeer bank profits?

That diversity was reinforced by a deal unveiled earlier on Monday between HSBC and India's Canara Bank.

HSBC will take a 26% stake in a joint insurance business with Canara and New Delhi-based Oriental Bank of Commerce.

HSBC shares rose 1% in London, despite a global sell-off of shares that saw markets falling worldwide.

Richard Hunter, head of UK Equities at stockbrokers Hargreaves Lansdown, said HSBC's profits were a morale-booster in a falling market.

"The collective sigh of relief [in response] to these numbers was reflected by an early uptick in the share price, very much against the flow of the market."

HSBC's US boss, Bobby Mehta, quit his post in February after the bank issued a warning about its exposure to the housing market there.

Significant numbers of HSBC customers had difficulty meeting repayments on large mortgages while US house prices stalled.