Here’s a shocker: British bank HSBC disclosed a smaller than expected provision for bad loans in its U.S. business today and said that its profits in Q1 “increased.” The positive colour from the world’s third largest bank sent shares soaring in London today with HSBC gaining as much as 2%. Also on the positive side, the bank suggested that there would be a “lull” in U.S. delinquencies in the near term. The colour wasn’t all good, however. Bloomberg:
The outlook for the rest of the year “remains unusually difficult to foresee in the current environment,” the company said in a statement.
The London-based company expects the U.S. economy to slip into a recession as deterioration in the housing market extends into 2009. While first-quarter earnings declined in the U.S. after last year’s $1.1 billion loss, HSBC reported higher pretax profit in Asia, the Middle East, Latin America and the U.K., where mortgage lending climbed.
“People need to remember how strong Asia can be,” said Simon Maughan, a London-based analyst at MF Global Securities Ltd., who has a “buy” rating on HSBC. “The U.S. provisions are less than some of the more aggressive forecasts.”
So before you get too excited about the US credit crisis being behind us, remember that HSBC rakes in the lion’s share of its revenues and profits from overseas.
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