HSBC also agreed to invest in a 50% interest in a new life joint venture in India, in partnership with two of the larger state-owned banks, and to acquire just under 50% equity of Hana Life Insurance Company in South Korea.

In Central and Latin America performance was buttressed by the acquisition of Grupo Banistmo in Central America and Banco Nazionale in Argentina in 2006.

US Consumer credit market

Due to the global market turmoil, loan impairment charges and other credit risk provisions increased by 79% to $11.7 billion in the Personal Financial Services business.

The higher risk mortgage services portfolio has been reduced from $49.5 billion to $36.2 billion in the last 12 months as the housing market continues to deteriorate in the U.S.

The bank also discontinued mortgage services correspondent and broker originations and US retail branches were closed, while the lending has been tightened.

Outlook

HSBC forecasted that the outlook for 2008 is still uncertain.

“The economic slowdown and the credit outlook in the US may well get worse before they get better. With significant parts of the international financial system in developed markets still in difficulty…,” the lender said.

Share Price Review

Shares of HSBC rose 2.35% or 18 pence to 784 pence in afternoon trading at the London Stock Exchange, counted amongst the few movers in a widely receding market.

Over the past year, the stock has lost almost 14% of its value and touched a high of 972 pence and a low of 676 pence. Most banks in Europe have fallen more than 30% in the last nine months of trading and most American banks and brokerages have declined more than 50% in the same period.

Subprime and other UK banks

At least four of HSBC’s competitors have so far reported losses due to the sub-prime mortgage market problems. Royal Bank of Scotland last week wrote down £2.5 billion worse than the initial £1.5 billion estimated in November. Barclays reported writedowns of £1.6 billion and HBOS £277 million.

HSBC has a relatively stronger presence in the U.S financial market than most of its UK competitors. Generally, however, U.S financial institutions have by far felt the credit crisis more than their UK peers.

To reduce future losses related the U.S credit crisis, HSBC, has started restructuring. The bank has now closed about 400 branches in the U.S and has cut the amount of credit it extends.