HSBC 1q09

(Adds detail.) By Ragnhild Kjetland
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--HSBC Holdings PLC (HBC) said Monday it remains "well-positioned" for the "highly uncertain environment" after performance in the first quarter bounced back from a difficult fourth quarter.

The bank said underlying pretax profit was well ahead of the first quarter of last year, but that it was helped by $6.6 billion in gains as the value of its own debt declined. A year ago, the gain on own debt was $2.5 billion.

Just as banks take write-downs on their investments if the market value on them declines, they can record gains if the value of their debt held by others in the market drops.

Excluding the debt gains, which can be reversed in time, pretax profits were lower that a year earlier, although "significantly higher" than in the fourth quarter.

HSBC said that, even excluding the debt gains, it generated enough earnings in the quarter to more than cover the first interim dividend on $0.08 a share.

"We're not saying by how much we covered it," Chief Financial Officer Douglas Flint told analysts.

"Our operating performance in the first quarter was encouraging, boosted by record results from our global banking and markets business" Chief Executive Michael Geoghegan said.

The trend of solid investment banking operations thereby continued at HSBC. It did especially well in foreign-exchange and interest-rate trading, but the CEO said he doesn't think the business will show "these kinds of results" in the long term.

Hargreaves Landsdown Stockbrokers analyst Richard Hunter said the "broader measures" of HSBC's performance largely mirrored that of other banks, but he said the situation at the U.S. operations remains a drag on the immediate outlook.

Hunter said HSBC is well-capitalized and still benefits from its business mix and geographical diversity.

Since a 10-year low of 270 pence a share in March, HSBC's shares have more than doubled in value.

Just prior to the first-quarter statement, HSBC's shares were down 18 pence. At 1216 GMT, they were down 9.5 pence, or 1.7%, at 568 pence.

HSBC in April became the last of the U.K. banks to raise cash from shareholders. The CEO said Monday that with the additional capital, the group is "well-positioned to ride out the economic uncertainty ahead and to take advantage of opportunities to grow."

Since HSBC first warned about the deterioration of the subprime loans in the U.S., it has taken massive impairments. With the economic slowdown in full force, impairments rose again in the first quarter, in all customer groups and regions. More than half of the increase came from the personal financial services business, largely due to "continuing weakness" in the U.S.

It said, however, that the impairments, while higher than the first quarter last year, were lower than in the fourth quarter, also in the U.S.

HSBC has ceased new consumer lending at Finance Corp., and is running down the loan book. At the end of the quarter, it was at $96 billion, down from $100 billion at the year-end.
Meanwhile, HSBC said Asia remains its strongest region.

"Asia is still fairly resilient in terms of impairments. It is not stretched by any measure," Geoghegan said.

He said that "clearly" that isn't the case in other markets, such as Latin America, India and the Middle East where it is seeing some deterioration. Also in the U.K., he expects impairments to rise for some time to come.

Company Web site: www.hsbc.com
-By Ragnhild Kjetland; Dow Jones Newswires

Bilibala comments:
One of the problem I have with HSBC is that they don't never issue a detail 1q09 results nor stat supp for me to review, therefore, no comments, but I still believe HSBC is one of the best financial institution in the world.