Mr Geoghegan remains optimistic on Asia's economic outlook, despite widespread worries that a slowdown in the United States could stunt the bank's growth in the region.

'I believe growth in Hong Kong, China and the rest of Asia will continue,' he said, adding that Latin America also would do well.

The bank is refocusing on Asia and emerging markets after being set back by subprime mortgage woes in the United States. Last year, the Asia-Pacific contributed more than 50 per cent of the group's pre-tax profit.

Indonesia, which offers strong synergy for growth, could be a market where the bank expanded through acquisitions to complement its own business, said Sandy Flockhart, chief executive of Hongkong and Shanghai Banking Corp, the group's Asia-Pacific unit.

With some regulatory restrictions expected to be lifted as part of the country's commitment for joining the World Trade Organisation, India was another growth market by acquisition, he added.

The bank, which has a 15 per cent stake in Vietnam Technological and Commercial Joint-Stock Bank, has obtained approval in principle from regulators to set up a wholly foreign-owned bank in Vietnam, becoming one of the first foreign banks to incorporate locally in the market.

The bank also bought a stake in Taiwan's Chinese Bank in December last year and agreed to buy 51 per cent of Korea Exchange Bank from US private equity firm Lone Star in September. Hang Seng Bank, its Hong Kong subsidiary, said last month it would buy 20 per cent of Shandong-based Yantai City Bank.

However, the market still takes a dim view of HSBC's prospects.

Shares of HSBC yesterday edged up just 0.92 per cent to close at HK$120.40 despite its better than expected earnings results.

JP Morgan cut its price target for HSBC by 17 per cent to HK$110. While agreeing that the core strength of the bank lies in Asia and emerging markets, the investment bank expressed concern over the quality of HSBC's US assets and its future in Europe.

While raising its price target for HSBC to HK$128 from HK$114, Goldman Sachs maintained its 'sell' recommendation.

Although HSBC has taken various measures in both its subprime mortgage as well as card businesses to protect its position, Mr Geoghegan said it could be affected further if the US credit crunch worsened.

'We are in a robust position, but we don't rule out making more provisions,' he said. 'I believe we are well managed.'

Knight Vinke Asset Management, the bank's activist shareholder, said HSBC's underlying profit last year - excluding currency changes, acquisitions and one-off gains - fell almost 14 per cent and reiterated that HSBC Finance be disposed of to raise the group's share value.

Mr Geoghegan said the bank was still committed to HSBC Finance and that it was taking a long-term view of the business.

HSBC's emerging markets

2007

Mainland

Built up biggest branch network of any international bank since being among the first to incorporate on the mainland

Taiwan

Acquired Chailease Credit Services, one of the island's leading factoring companies

Agreed to acquire the Chinese Bank from the bankrupt Rebar Group

South Korea

Agreed to acquire 51 per cent of Korea Exchange Bank

Vietnam

Increased stake in Techcombank by 5 per cent to 14 per cent

Acquired 10 per cent of Vietnam Insurance Corp

India

Agreed to take 26 per cent interest in a new life insurance joint venture with two state-owned banks

2008

Malaysia

Set up HSBC's first Islamic bank after fully incorporating subsidiary HSBC Amanah Malaysia