HSBC Holdings Europe's biggest bank by market value set aside €2 billion ($3.2 billion) in the first quarter to cover bad loans in the US and said profit in 2008 is ahead of the same period a year ago.
"The outlook for the rest of the year remains unusually difficult to foresee in the current environment," Chairman Stephen Green said today in a statement.
HSBC, which makes about two thirds of its profit in emerging markets, said in March that the US economy and credit outlook may deteriorate before it improves.
The London-based bank set aside about €7.8 billion for US loan losses last year and an additional €3.37 billion for the rest of the world. Net income rose 21 per cent in 2007 to €12.4 billion, helped by loan growth in Asia and Latin America.
HSBC rose 1.1 per cent to 876 pence in London trading before today's statement, valuing the bank at almost £115 billion (€145.5 billion). The stock has gained 3.9 per cent this year, the best-performance in the eight-member FTSE 350 Banks Index, which declined 8.7 per cent.
Financial companies worldwide have posted losses of $323 billion related to the collapse of the US subprime mortgage market.
HSBC, which gets less than 30 per cent of its funding from wholesale markets, has said it will increase mortgage lending this year as banks including Edinburgh-based HBOS Plc trim lending amid the shortage of funds.
The 142-year-old bank paid $15.5 billion for Household International in 2003, becoming one of the largest US subprime lenders. Bad debts at its US former Household unit may rise to about $15 billion this year, analysts at UBS AG said this
month.
Bloomberg