July 31, 2007 | posted by Michael Baxter in IABN |

Right now it feels as if the global economy is in two halves. On one side you have got the US, struggling under the weight of its massive trade deficit, which has borrowed itself to the point of crisis.

On the other hand, you have got the brave new world: India and China et al promise the potential of great riches.

It’s a good time to be a bank called the Hong Kong and Shanghai Banking Corporation. It’s a good time to be a bank that has been around since Victorian times, and has detailed understanding of the Asia Pacific region.

The trouble is it’s not called that anymore. It bought the Midland Bank, and changed its name to HSBC, and then the US became a vital part of the business. In fact, in the first half of 2006, the US brought in more profit than any other region for the bank. The US made a $3.74 billion profit for the bank during that period, which came in at 29.9 per cent of all profits.

But then today, it’s a different story. In the first six months of this year, US profits slumped to $2.43 billion, and more to the point, as the US sub-prime woes hit the bottom line, the bank has been forced to increase its charges for bad debts to $6.35 billion, this is 63 per cent up on a year earlier.

But, meanwhile, profits in the Asia Pacific Region, Hong Kong and Europe all grew dramatically. In fact profits in Hong Kong jumped from $2.7 billion a year ago to $3.3 billion, while the rest of Asia Pacific saw profits jump from $1.7 billion to $3.3 billion.

A year ago Hong Kong and the rest of Asia Pacific made up 34 per cent of total profits, in the half year just ended they made up 47 per cent.

Europe did well too. Despite incurring £116m through the cost of dealing with UK customers claiming they had been overcharged, profits in Europe jumped to just over $4 billion from $3.6 billion in the same period last year.

In all, HSBC made a profit of $14.15 billion, before tax, compared to $12.517 billion this time last year.

As for the future, HSBC, seems sure to be put a lot more emphasis on what those four letters relate to H-S-B-C - Hong Kong and Shanghai Banking Corporation.
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