Europe’s biggest bank, HSBC, said its first-half profit fell 23% due to bad debts on US home loans and asset writedowns. Pretax profit was 6.5 billion euros, down from over nine billion a year before. The bank warned the outlook for economies is “highly challenging,” but said its growth in Asia was strong. It has a major presence there which gives it an advantage over rivals.
HSBC has the fourth highest level of losses from US subprime mortgage related investments at around 10 billion euros. Citigroup is worst hit at 27 billion, followed by UBS at 24 billion and Merrill Lynch with 20 billion.
Some way behind that top four is Fortis with 1.8 billion in writedowns. That was enough to pull down the Belgian-Dutch financial group’s profits by 415 in the first half. Investors were not happy with Fortis after it surprised them with an emergency solvency plan five weeks ago which led to the departure of its chief executive.