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HSBC results: itÆs all about Asia

HSBCÆs results show the majority of profit growth came from its Asian businesses.
At its core, HBSC has always been an Asian bank, and its 2006 annual results û announced yesterday û signify AsiaÆs importance to the groupÆs growth. Indeed, they underscore why recent remarks from the bankÆs senior management have stressed HSBCÆs renewed focus on Asia.

HSBCÆs profits before tax grew to $22.08 billion. But it was the profit growth from Asia that dominated. AsiaÆs share of HSBCÆs total group profit grew from 33.8% in 2005 to 39.5% in 2006.

In fact, AsiaÆs pre-tax profit rose by $1.62 billion to $8.7 billion. Compare that with other regions of the world: North America was down $1.24 billion; Europe was up $618 million; and Latin America was up just $131 million. That suggests that if Asia had not performed so strongly û for example, had it been flat û the groupÆs profits would have been down.

Moreover, if you look at percentage growth it is clear that Asia was the chief growth engine. Asian profits were up 23%, versus 9.72% for Europe and 8% for Latin America. Needless to say American mortgage problems saw North AmericaÆs profits fall 21%.

Perhaps the most impressive number is that almost $1 billion of profit was added by HSBCÆs Asian business lines outside Hong Kong. This performance points to the increasingly regional balance of HSBCÆs business in Asia û whose P&L had historically been skewed towards Hong Kong.
¬ Haymarket Media Limited. All rights reserved.

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