HSBC Holdings, which owns Hongkong Bank and most of Hang Seng Bank, boosted pre-tax profit 10 per cent in the first half of the year, helped by lower-than-expected provisions for bad and doubtful debts in Asia and higher profits in Hong Kong. Announcing the results, which confounded many analysts' forecasts, senior bank officials yesterday sounded a more optimistic note about Hong Kong's prospects. 'There are signs that Hong Kong has weathered the worst of the storm,' HSBC chief executive Keith Whitson said. 'Hong Kong has got a remarkable ability to tighten its belt . . . people are very hard-working, very highly educated, have a propensity to save, are very resilient, and I think they will come back strongly.' HSBC's Hong Kong operations generated a pre-tax profit of US$1.39 billion (HK$10.77 billion), up from US$1.28 billion, and accounted for 34.2 per cent of the group's total pre-tax profit of US$4.06 billion. For Hong Kong, HSBC produced a bumper set of figures, reporting a 39.7 per cent rise in net profits to HK$8.5 billion. HSBC's overall charge for bad and doubtful debts was US$1.08 billion, US$64 million lower than in the same period last year and US$409 million below the second half of last year. While directors said banking conditions in crisis-hit Indonesia and Thailand had radically improved, they warned that Hong Kong still faced problems related to loans made to local companies and companies with exposure to the mainland. Bad-debt provisions for mainland-related companies in Hong Kong, the mainland and Macau were HK$1.74 billion. Chairman John Bond said that if the United States remained stable and the Asian recovery strengthened, then a sustained upturn in the region could be achieved. At Hang Seng Bank, net profit rose 12.1 per cent to HK$4.26 billion as it also benefited from lower-than-expected provisions. It said funds set aside for bad and doubtful debts had dropped to HK$789 million from HK$902 million but its total of non-performing loans was up. Chairman David Eldon said: 'While the economic downturn may have bottomed out, there are few indications of a strong turnaround in the remainder of the year.' In London, HSBC's shares rose 3.6 per cent to close at 765p. In Hong Kong, the shares closed 3 per cent higher at HK$94.25.