HSBC, despite making a $17.2bn provision for loan loss and other credit risks, posted pre-tax profits of $24.2bn, up 9.6% on the previous year.
Royal Bank of Scotland, despite North American exposure though Citizens Financial Group and its commitment to the ABN AMRO takeover, posted a 7.8% increase in pre-tax profit – largely on the back of a 118% increase in assets and a 47.7% increase in tier 1 capital through its ABN acquisitions. Pre-tax profit figures only included the ABN contribution from mid-October to the year-end.
Barclays, HBOS and Lloyds TSB all suffered a downturn in profit over the previous year, varying from slight at -0.8% (Barclays) to -5.8%(Lloyds TSB). Barclays, which took the next biggest provisioning hit after HSBC at $5.6bn, had some late developing problems at Barclays Capital, while HBOS attributes its downturn to the disposal of Drive and a reduction in policyholder tax payable. Lloyds TSB spoke of “adverse policyholder interests volatility”. Standard Chartered was the star performer, growing pre-tax profit 27% to $4bn on a 23.7% growth in assets to $329.2bn and a 30.8% growth in tier 1 capital to $16.8bn. A policy of careful acquisitions led to its September 2007 announcement of the purchase of American Express Bank, subject to regulatory approval. In January this year it announced the acquisition of Yeahreum, a mutual savings bank in South Korea.
The message from Standard Chartered and HSBC, whose US losses were offset by strong performances from its Asian operations, is ‘Go East’ where the economies look better set to ride out an economic slowdown in the ‘old world’.
