HSBC Holdings Plc, the world's No. 2 bank by market value, increased second-half profit 58 percent after the $15.5 billion purchase of Household International Inc. and said it plans to focus on expansion in China and India.
Net income in the six months through December rose to a record $4.67 billion from $2.96 billion in the year-ago period, according to Bloomberg calculations. The median estimate of nine analysts surveyed by Bloomberg was for profit of $4.46 billion.
The acquisition last March of Household, a Prospect Heights, Illinois-based lender to consumers with spotty credit histories, gave London-based HSBC 50 million customers in the U.S., the world's largest economy. Chairman Sir John Bond, 62, said he now plans to expand in countries such as India, China and Brazil.
``HSBC had some nice easy benefits from the acquisition of Household,'' said Alan Beaney, who helps manage the equivalent of $1 billion, including HSBC shares, at Principal Investment Management in Sevenoaks, England. ``India and China are attractive areas because that's where the economic growth is.''
Shares of HSBC fell 14 pence, or 1.6 percent, to 861.5 pence at 11:58 a.m. in London. The company set aside $6.1 billion last year to cover loans that may not be repaid, up from $1.3 billion in 2002 because of the Household acquisition.
Better Outlook
``The outlook is much better than it was this time last year,'' Bond said in a telephone interview. ``We are naturally very keen to increase our investment in China. We are looking around the world all the time at opportunities.''
HSBC, which has spent about $46 billion on U.S. and European takeovers in five years, forecasts that countries such as China, India and Brazil, will account for half of global economic growth over the next quarter century. HSBC currently makes almost a third of profit each in Asia, Europe and the Americas.
China's economy, the world's sixth-largest, grew 9.9 percent in the fourth quarter from a year earlier as investment surged. India's economy will expand 8.1 percent in the 12 months to March 31, the country's Central Statistical Organization forecast.
HSBC will also try to maintain growth by expanding businesses including consumer finance insurance, fund administration and investment banking, Bond said.
Investment Banking
Earnings at banks including Citigroup Inc., Frankfurt-based Deutsche Bank AG, BNP Paribas SA of France and Royal Bank of Scotland Group Plc jumped in the second half as low interest rates and recovering stock markets boosted fees from debt underwriting, stock sales, securities trading and mergers advice.
Pretax profit before amortization at HSBC's corporate, investment banking and markets unit rose 14 percent to a record $4.44 billion last year, helped by debt underwriting. In the second half, profit rose to $2.21 billion from $1.83 billion.
The unit's co-heads Stuart Gulliver, 44, and John Studzinski, 47, are trying to boost earnings by winning more lucrative assignments advising on mergers and financing. They plan to announce four new hires in the markets unit, which includes sales and trading, as well as bankers for their health- care and media teams in the coming weeks, they said today.
HSBC rose to eighth from 11th in managing international bond sales last year and wants to be among the top 10 advisers on U.S. takeovers. It placed 23rd last year.
Spending Revival
The bank will pay a third interim dividend of 24 cents a share, bringing the total 2003 dividend to 60 cents a share, an increase of 13 percent from the previous year, the company said in a Regulatory News Service statement detailing 2003 earnings.
Bloomberg calculated second-half profit by subtracting results in the first six months from the annual figures.
HSBC benefited from a revival in consumer spending in the U.S., where gross domestic product expanded at a 4.1 percent annual rate in the fourth quarter. North America generated 30 percent of pretax profit last year, up from 13 percent in 2002, the bank said. Loan losses at Household improved in the second half and that trend may continue into the first half, HSBC said.
``It was a good deal and done at the right time of the cycle,'' said Michael Gifford, a fund manager at Isis Asset Management in London, which oversees about $119 billion, including HSBC shares. He spoke before earnings were released.
Bond has said the Household purchase was his last ``transforming acquisition.'' HSBC will now focus on buying companies for less than $5 billion and on gaining revenue from existing businesses, he told investors in November.
No German Acquisitions
HSBC, founded in Asia in 1865 to fund trade in silk and tea, in October agreed to buy a consumer finance business in Brazil from Lloyds TSB Group Plc, the U.K.'s fifth-largest bank, for $815 million and said it may make more purchases.
The bank said in December it will buy a stake in UTI Bank Ltd., the consumer-banking unit of India's largest money manager, to tap a market for mortgages and credit cards in a nation of 1 billion people. In China, Hang Seng Bank Ltd., a unit of HSBC, will pay $209 million for 16 percent of Industrial Bank of Fujian, making it the biggest foreign investor in a Chinese bank.
HSBC isn't planning any big acquisitions in Germany or Europe, Chief Executive Officer Stephen Green said in an interview. The Sunday Express reported yesterday that Deutsche Bank executives approached HSBC about a merger in the past two weeks. Green declined to comment specifically on Deutsche Bank.
HSBC's shares have gained 27 percent in the past 12 months, valuing the company at 95 billion pounds ($177 billion). Shares of New York-based Citigroup Inc., the world's biggest financial services company, gained 51 percent in the period.
Net income in the six months through December rose to a record $4.67 billion from $2.96 billion in the year-ago period, according to Bloomberg calculations. The median estimate of nine analysts surveyed by Bloomberg was for profit of $4.46 billion.
The acquisition last March of Household, a Prospect Heights, Illinois-based lender to consumers with spotty credit histories, gave London-based HSBC 50 million customers in the U.S., the world's largest economy. Chairman Sir John Bond, 62, said he now plans to expand in countries such as India, China and Brazil.
``HSBC had some nice easy benefits from the acquisition of Household,'' said Alan Beaney, who helps manage the equivalent of $1 billion, including HSBC shares, at Principal Investment Management in Sevenoaks, England. ``India and China are attractive areas because that's where the economic growth is.''
Shares of HSBC fell 14 pence, or 1.6 percent, to 861.5 pence at 11:58 a.m. in London. The company set aside $6.1 billion last year to cover loans that may not be repaid, up from $1.3 billion in 2002 because of the Household acquisition.
Better Outlook
``The outlook is much better than it was this time last year,'' Bond said in a telephone interview. ``We are naturally very keen to increase our investment in China. We are looking around the world all the time at opportunities.''
HSBC, which has spent about $46 billion on U.S. and European takeovers in five years, forecasts that countries such as China, India and Brazil, will account for half of global economic growth over the next quarter century. HSBC currently makes almost a third of profit each in Asia, Europe and the Americas.
China's economy, the world's sixth-largest, grew 9.9 percent in the fourth quarter from a year earlier as investment surged. India's economy will expand 8.1 percent in the 12 months to March 31, the country's Central Statistical Organization forecast.
HSBC will also try to maintain growth by expanding businesses including consumer finance insurance, fund administration and investment banking, Bond said.
Investment Banking
Earnings at banks including Citigroup Inc., Frankfurt-based Deutsche Bank AG, BNP Paribas SA of France and Royal Bank of Scotland Group Plc jumped in the second half as low interest rates and recovering stock markets boosted fees from debt underwriting, stock sales, securities trading and mergers advice.
Pretax profit before amortization at HSBC's corporate, investment banking and markets unit rose 14 percent to a record $4.44 billion last year, helped by debt underwriting. In the second half, profit rose to $2.21 billion from $1.83 billion.
The unit's co-heads Stuart Gulliver, 44, and John Studzinski, 47, are trying to boost earnings by winning more lucrative assignments advising on mergers and financing. They plan to announce four new hires in the markets unit, which includes sales and trading, as well as bankers for their health- care and media teams in the coming weeks, they said today.
HSBC rose to eighth from 11th in managing international bond sales last year and wants to be among the top 10 advisers on U.S. takeovers. It placed 23rd last year.
Spending Revival
The bank will pay a third interim dividend of 24 cents a share, bringing the total 2003 dividend to 60 cents a share, an increase of 13 percent from the previous year, the company said in a Regulatory News Service statement detailing 2003 earnings.
Bloomberg calculated second-half profit by subtracting results in the first six months from the annual figures.
HSBC benefited from a revival in consumer spending in the U.S., where gross domestic product expanded at a 4.1 percent annual rate in the fourth quarter. North America generated 30 percent of pretax profit last year, up from 13 percent in 2002, the bank said. Loan losses at Household improved in the second half and that trend may continue into the first half, HSBC said.
``It was a good deal and done at the right time of the cycle,'' said Michael Gifford, a fund manager at Isis Asset Management in London, which oversees about $119 billion, including HSBC shares. He spoke before earnings were released.
Bond has said the Household purchase was his last ``transforming acquisition.'' HSBC will now focus on buying companies for less than $5 billion and on gaining revenue from existing businesses, he told investors in November.
No German Acquisitions
HSBC, founded in Asia in 1865 to fund trade in silk and tea, in October agreed to buy a consumer finance business in Brazil from Lloyds TSB Group Plc, the U.K.'s fifth-largest bank, for $815 million and said it may make more purchases.
The bank said in December it will buy a stake in UTI Bank Ltd., the consumer-banking unit of India's largest money manager, to tap a market for mortgages and credit cards in a nation of 1 billion people. In China, Hang Seng Bank Ltd., a unit of HSBC, will pay $209 million for 16 percent of Industrial Bank of Fujian, making it the biggest foreign investor in a Chinese bank.
HSBC isn't planning any big acquisitions in Germany or Europe, Chief Executive Officer Stephen Green said in an interview. The Sunday Express reported yesterday that Deutsche Bank executives approached HSBC about a merger in the past two weeks. Green declined to comment specifically on Deutsche Bank.
HSBC's shares have gained 27 percent in the past 12 months, valuing the company at 95 billion pounds ($177 billion). Shares of New York-based Citigroup Inc., the world's biggest financial services company, gained 51 percent in the period.
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