WITH HSBC Holdings' annual results only a week away, analysts say its international diversification will pay off, with profits propped up by strong growth outside Hong Kong.
Despite narrowing Hong Kong lending margins and heavy bond trading losses in the first quarter of last year, HSBC is forecast to register profit growth of 15 per cent to 22 per cent.
Analysts expect lower provisioning and strong earnings growth at British subsidiary Midland Bank but evidence of a margin squeeze on Hong Kong lending business.
Wild cards remain, with HSBC having a history of reporting big losses in its far-flung empire that analysts had not reckoned on. The biggest unknown is Hang Seng Bank, which is being forecast by some to register negative earnings growth depending on the level of asset sales made last year.
Disposals accounted for 25 per cent of its 1993 earnings and a collective dart-throwing contest is being held by researchers who admit they have little idea how much of its investment portfolio was realised last year.
Most predicted sales of $1.2 billion to $1.9 billion, with profit figures ranging from $6.75 billion at S G Warburg to $7.4 billion at Morgan Grenfell.
At the top end of expectations, Alan Hutchison, deputy research director at Morgan Grenfell, said Marine Midland's 30 per cent profit rise in the United States, plus better-than-expected results at Midland in Britain would generate a group profit of $25.8 billion, representing a 22 per cent growth in earnings.