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Wed, Aug 02, 2006 - Page 10 News List

HSBC reports 15 percent rise in first half net profit

AP , LONDON

Banking group HSBC Holdings PLC reported a 15 percent rise in first-half net profit on Monday, as it said its expansion into emerging markets was showing results.

HSBC, which operates in Britain, Europe, Asia and the Americas, said net profit for the half year ending on June 30 came to US$8.73 billion from US$7.6 billion. That beat the US$8.1 billion expected by analysts surveyed by Dow Jones Newswires.

The London-based bank said it was boosted by business in emerging markets while operations in mature economies "continued to perform well." HSBC also said that the global economy remains strong, led by "intense" growth in China.

"In any event, we will continue to position HSBC to take best advantage of the changing nature of the world's economy," it said.

HSBC signaled its commitment to two key Asian markets, as officials said it plans to double its staff in China and enter Japan's retail banking market for the first time.

Peter Wong, the banking group's executive director for Hong Kong and China, said HSBC expected to hire 1,000 new staff this year and 1,000 more next year in China. He told Dow Jones Newswires that the recruitment was necessary because of an increase in foreign direct investment. HSBC currently has 2,100 staff in China, working from 34 branches.

Vincent Cheng, HSBC's Asia-Pacific chairman, also said the company also plans to expand in Japan.

"The Japanese market is showing signs of change. We are now seeing more demand for investment products and HSBC is recognized as a fund-management provider," Cheng told Dow Jones Newswires. "That gave us strong confidence to make inroads into Japan."

The half-year results were boosted by growing business in emerging markets. Profits in Brazil, China and India all rose by 20 percent or more.

HSBC has also invested heavily in the investment bank business, and the higher profits came as cost controls took hold alongside a surge in revenues from new business.

The bank said revenues at the investment bank grew by US$1.37 billion compared with a flat performance a year ago.

At the same time, costs rose by just US$429 million compared with US$650 million in the first half of last year.

"This translated into a positive gap between revenue growth and cost growth," HSBC said.

But HSBC warned that bad debts reached US$3.89 billion in the six months to June 30.

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