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HSBC Focuses on
Household Integration
HSBC, said on Monday that the integration of Household, the US consumer
finance group, would be its primary objective in 2003.
The bank, which is the second largest in the world, said it hoped to
complete the $14bn (£8.9bn) acquisition by the end of the month. Sir John
Bond, chairman, said that economic uncertainty has been "compounded by
political uncertainity about developments in the Middle East". The bank
said that it was preparing for the impact of a possible conflict in the
Middle East by building up its liquidity.
HSBC's pre-tax profits after amortisation of goodwill were $9.65bn ($8bn)
Bad debt charges fell by $716m to $1.3bn and the improvement in 2002
reflected HSBC's decision in 2001 to take a $600m provision because of its
exposure to Argentina. The shares rose 4p to 688p.
However, some analysts expressed disappointment in increased operating
costs which accelerated in the second half, rising from $14.6bn in 2001 to
$14.95bn last year. Douglas Flint, finance director, said that some
one-off costs had been pushed into the second half including $76m from
moving headquarters as well as $45m from integrating a joint wealth
management venture with Merrill Lynch. HSBC also said it had injected
£500m into its staff pension scheme. In Hong Kong, pre-tax profits
declined to $3.7bn ($3.8bn). HSBC has suffered from a rise in bankruptcies
in Hong Kong and mounting credit card bad debt. In Europe, profits were
flat at $4.1bn but in North America, where HSBC is buying Household,
profits almost doubled to $1.3bn. Boardroom rewards went up 10 per cent to
£9.7m.
Sir Keith Whitson, chief executive, was the highest paid receiving
remuneration of £2.17m (£1.5m). Sir Keith will be replaced by Stephen
Green, head of investment banking who was paid £965,000 in 2002. Sir
John's remuneration rose from £1.82m in 2001 to £1.88m in 2002. In
personal financial services, profits rose by 8 per cent to $4.4bn although
profits fell in private banking by 9 per cent to $433m partly through
falls in the stock market. HSBC said that it planned to increase the
amount of staff it had outside the UK to 8,100 by the end of the year and
plans a sixth centre for Malaysia. The second interim dividend is $0.325
making a total of $0.53, an increase of 10.4 per cent over 2001. This is
payable from earnings per share of $0.67 against earnings per share of
$0.54 in 2001.
Source: Financial Times
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