The bank released its annual results after the close of trade in Hong Kong yesterday.

Sunil Garg, a banking analyst at Fox-Pitt, Kelton, said: 'Investors looked at the results and saw slowing revenue growth in the second half, bad-debt charges that came in a bit higher than expected, and margins in the US that were a bit weaker than expected.'

With results meeting but not beating forecasts - earnings per share rose 30 per cent to US$1.09 against a consensus of US$1.08 - market reaction was understandably muted, Mr Garg told the South China Morning Post.

But Mr Garg and CSFB analyst Bill Stacey believed that investors had over-reacted to concerns about continued high profit growth for the global lender now that the impact on headline earnings from acquisitions had run its course.

'I think it is fairly apparent in the results where areas of disproportionate growth will come from, and obviously Brazil and Mexico are becoming large contributors and are growing fairly rapidly,' Mr Stacey said.

'They have also emphasised cost controls in markets such as Hong Kong, Britain and the US, where they see less growth - so a combination of some markets that are growing rapidly and a continuing focus on costs will maintain earnings' momentum,' he said.

While that would not be enough to produce 30 per cent growth in earnings this year, underlying profit growth of 13 per cent excluding the effects of acquisitions would be a 'good outcome', Mr Stacey said.

'If you look at the numbers going forward, purely from a reported perspective, there will be no goodwill amortisation going forward and volume growth in some markets continues to be very strong,' Mr Garg said.

'Obviously you must strip out the impact of Household International,' he said, referring to the United States consumer finance group that began contributing to profit in March last year.

'On a cash basis things ought then to slow down. But as long as credit quality does not become a major problem the group should be able to continue delivering growth from these levels.'

At a pretax level and excluding goodwill amortisation, foreign exchange translations and the effect of provisions, HSBC earnings rose US$5.03 billion, or 35 per cent year on year, to US$19.43 billion.

A little more than 30 per cent of the gains, or US$1.87 billion, came from underlying profit growth.

Most of the remaining growth was the result of lower provisions (US$1.29 billion) and 25 per cent came from Household (US$1.11 billion) and other acquisitions, including Bank of Bermuda and the Brazilian operations of Lloyds TSB (US$224 million).

Group chief executive Stephen Green conceded that acquisitions had undeniably helped HSBC to post record earnings but a number of strategies were in place to ensure growth going forward.

'The group's risk profile has changed significantly over the past four years, with lending to the personal customer base now standing at 56.8 per cent of advances compared with 39 per cent in 2000,' he said.

In addition to moving into higher-yielding consumer lending, the group had expanded its business in higher-growth emerging markets, he added.

The rebalancing of the bank's loan portfolio since 2000 had seen the share of personal financial services growing at the expense of lending in the corporate and commercial sectors, which fell from a 51.5 per cent share in 2000 to 33.5 per cent last year.

Speaking in London, HSBC chairman Sir John Bond said the group remained keenly aware of the need to balance short-term results with investment required to secure the long-term future of the bank - which saw assets grow to US$1.2 trillion, making it the second-biggest bank in the world, after Citigroup.

Investments were targeted at markets in which the group enjoyed comparative advantage, as well as new markets offering 'significant potential', including China, he said.

China would be the most significant driver of global economic growth over the next decade, Sir John said.

'Our investments in China during 2004 reflect our confidence in the country's future. We also recognise the growth prospects of markets such as Brazil, India, Mexico, South Korea, Turkey and the Middle East, and for the same reasons we continue to invest in them.'

Last year, the bank generated US$1.1 billion in pretax profits before goodwill amortisation from Mexico, Turkey, Bermuda and Malta, where its presence had been small or non-existent five years ago, Sir John pointed out.

For the year ahead, the focus of the group, he said, would be on achieving further revenue growth as well as higher productivity.