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LONDON, May 25 (Reuters) - HSBC (HSBA.L) (0005.HK), Europe’s largest bank, said on Friday it had made a good start to 2007, helped by a strong performance in Asia, and said its efforts to resolve problems with its U.S. mortgage book were working.
HSBC executives told the market earlier this month the bank was confident it was on top of problems in the U.S. business. Its new management team, addressing shareholders for the first time since it took over last year, gave shareholders the same message on Friday.
“Some commentators have asked, ‘Should we be in this business?’ We paid $14.8 billion for this business in 2003, and it has already generated profits for your group totalling over $9 billion. In my book, this is a good business for us,” Chief Executive Michael Geoghegan told shareholders.
“While there have been some challenges in the USA this year, there have also been opportunities which, when fully implemented, will demonstrate the wisdom of this acquisition.”
The bank said revenue growth in Europe was constrained “as a result of our credit appetite and competitive forces” and said the major focus had been on savings products.
UK banks signalled a sharp rise in bad debts last year as customers struggled to repay unsecured loans, but HSBC said the situation did not deteriorate in the first months of 2007.
“Underlying credit impairment experience in the UK bank was broadly in line with the previous quarter,” Geoghegan said.
In Asia, the bank said it was capitalising on growing economies in the first months of 2007, with robust equity markets boosting investment-related fees and broking income in Hong Kong, while Latin American revenue growth was encouraging.
Geoghegan said private banking delivered “excellent results”. HSBC’s corporate, investment banking and markets business was being led by emerging markets, with over half its pretax profit from Asia and Latin America and particularly strong performances in foreign exchange and securities services.
Friday marks a year in charge for HSBC’s top management team, Chairman Stephen Green and Geoghegan, who have spent much of their first 12 months at the helm handling the fallout from the bank’s exposure to the U.S. housing market downturn.
HSBC shares were down 0.05 percent at 929.5 pence at 1113 GMT, against a 0.2 percent dip in the FTSE.
((Reporting by Clara Ferreira-Marques
Editing by Will Waterman
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