Stock Picker

End of year results from HSBC rounded off the banks’ reporting season last week. Despite record write-downs, the group still managed a £1.1bn increase in pre-tax profits to £12.2bn, with growth in Asia and emerging markets offseting weaknesses in the US.

The profit share generated by the North American market collapsed from 21.1% to just 0.4%. Despite this massive drop the group intends to stand by its US operations.

Hong Kong and emerging markets now make up close to two-thirds of HSBC’s overall profits. Its tier one capital ratio, a measure of the strength of its balance sheet, remains strong at 9.3% and, unsurprisingly, its dividend to investors has been raised by 11%.

HSBC shares rose strongly following the results but have subsequently been hit by weaknesses in the financial markets.

The Bank of England’s Monetary Policy Committee held rates at 5.25% because of inflation fears. Nevertheless, cuts still look likely later this year.

And Prestbury Holdings’ share price fell after news that a management buyout for the firm had failed.

John Goodall is a private client research analyst at stock broker WH Ireland.