The widening global credit crunch and weaker-than-expected results in Hong Kong pushed profit at HSBC Holdings down by US$3.17 billion, or 29 per cent, to US$7.72 billion during the first six months of the year.
Group chairman Stephen Green blamed 'the most difficult financial markets for several decades' and saw no light at the end of the tunnel.
'The outlook for the near term remains highly challenging with significant uncertainty,' he said.
Europe's largest bank by market value and the parent of one of Hong Kong's biggest mortgage lenders was forced to write down US$3.71 billion in the first half, increasing the amount set aside for bad loans and investment losses by 58 per cent from a year ago to US$10.06 billion.
HSBC's 62 per cent owned subsidiary, Hang Seng Bank, fared better. Net profit was up 2.2 per cent to HK$9.06 billion, largely on growth in net interest income.
But a year after the onset of the subprime lending crisis started a global tightening of credit markets, the rising unemployment and falling housing prices in the US continued to weigh heavily on HSBC as a whole.
'Asset quality deteriorated further in the US business,' JPMorgan's Sunil Garg wrote in a research note. 'The scale of problems continues to worsen.'
