Global banking and insurance giant HSBC Holdings has enjoyed a successful 2006, after reporting a record $22.08 billion profit for the year, up 5% from 2005, despite suffering major setbacks in the struggling US mortgage market.
The finance firm also reported a 10% increase in its total operating income to $70 million for fiscal 2006. The group’s total assets at December 31, 2006 were $1,861 billion, an increase of $359 billion, or 24%, from the previous year.
Earnings per share closed at $1.40, an increase of 3% from the $1.36 in 2005.
The company also managed to write off $10.6 billion in bad debts, a 35% rise over the 2005 bad debt charge, This is Money reported. Its bad debt problems were fueled by the home loans crisis in the US, stemming from HSBC’s acquisition of Household Corporation in 2003.
This purchase allowed the bank to enter the sub-prime mortgage market in the US and begin lending to high-risk individuals. The US mortgage market suffered from rising interest rates and, consequently, a growing number of people began to default on their payments.
The finance giant’s record profits have drawn fire within the UK as it joins several other high street banks to report glowing financials at a time when many consumers have been angered by ‘unfair’ bank charges and threats of an end to free banking being on the horizon.