THE IRISH corporate banking division of HSBC, Europe's largest bank, increased deposits by 40 per cent in the first six months of this year and its income by 30 per cent, as more Irish corporate customers availed of investment opportunities in Asia and the Middle East.
Alan Duffy, HSBC's head of corporate banking in Ireland, said the bank had grown its Irish business as it has been seen by customers as "a corporate haven" amid the market turmoil. He said the bank, which makes 78 per cent of its group profits in emerging markets in Asia and the Far East, was attracting Irish investors seeking overseas opportunities.
HSBC reported a 28 per cent fall in half-year group profits, warning that conditions in financial markets were at their toughest "for several decades" and that the outlook was "highly challenging".
The bank's share price dropped 1.1 per cent to 828 pence in London, valuing the bank at £99.5 billion (€125 billion). The results were in line with analysts' forecasts. The half-year results were affected by bad debts on US home loans and asset writedowns, but countered by strong growth in the bank's Asian business.
The bank, which employs 600 people in Ireland, including 490 in Dublin, will be recruiting another 30 staff for its corporate banking business this year, doubling its staff in this division, Mr Duffy said.
The bank is moving to new offices on Grand Canal Square in Dublin in the coming months.
HSBC is also involved in insurance and fund management in Dublin. It launched its Irish private bank in April. The bank runs a retail business in Northern Ireland, where it employs 110 people.
Mr Duffy said the bank would continue to review the banking sector in the Republic to assess opportunities to launch other businesses, though he said HSBC had a focus on "emerging markets".
"We keep a watching brief," he said.
Group profits at HSBC fell by $3.9 billion (€2.5 billion) to $10.2 billion in the first six months, as HSBC's North American business made a loss of $2.8 billion. The bank's bad debt charge was $10.1 billion, an increase of 58 per cent from a year ago, mainly due to losses from its US mortgage book.
HSBC chief executive Mike Geoghegan said the bank was monitoring the UK mortgage market "carefully". The bank said that while the British economy was weakening, credit quality had not deteriorated in the first half. The bank said emerging markets will "hold up reasonably well, albeit with less momentum".
The bank announced new writedowns of $3.9 billion related to the credit crunch, having already written down assets linked to the slump in the US housing market by more than $15 billion in 2007.
HSBC chairman Stephen Green said: "Ultimately, the real economy will recover from this crisis, although it may get worse before it gets better."
The results helped drag US banks lower yesterday, as Wachovia and JP Morgan Chase fell in trading in New York.
Banks and financial institutions have taken asset writedowns and losses of almost $500 billion as a result of the credit crisis.
