HSBC Holdings PLC reported yesterday that first-quarter profit was better than in the same period a year ago despite a US$3.2 billion writedown on subprime mortgage assets in the US.
HSBC shares rose 2 percent on the London Stock Exchange after the announcement to 883 pence (US$17.26).
The bank did not release the figures for its first quarter, but is scheduled to report first-half earnings in August.
The report of higher first-quarter profit “is a claim few banks in Europe will be able to make, we believe,” said Alex Potter, analyst at Collins Stewart.
“The outlook statement is very muted but this is hardly a surprise, whereas the US performance was well above worst fears,” Potter said.
“HSBC remains a safe haven and core holding for us,” he said.
The write-down compared with a reduction in value of US$1.6 billion in the first quarter of last year and US$4.6 billion in the fourth quarter.
The outlook in the US this year is downbeat, group chairman Stephen Green said.
“It seems increasingly likely that the US will enter a recession in 2008, the length and depth of which is uncertain. The timing of any recovery in the US housing market, which is likely to be the primary stimulus in restoring confidence to the US economy, is also unclear,” he said.
“While illiquidity in financial markets remains of continuing concern, the major economic risks facing the global economy now include inflationary pressures, particularly from rises in food and energy prices,” he said.