HSBC's profits up on year despite U.S. hit

By Steve Slater

LONDON (Reuters) - Europe's biggest bank HSBC said its profit in the third quarter was ahead of a year earlier as growth in Asia helped offset almost 3.2 billion pounds in bad debts on U.S. home loans and asset writedowns.

HSBC also said its profits in the nine months to the end of September were lower than the same period of 2007, but by less than the 28 percent drop reported for the first-half.

The biggest bank outside China said global economic growth will slow during the next few quarters as recession takes hold in several countries.

"We're confident that Asia may well slow but it won't be impacted as much as other economies around the world," Michael Geoghegan, HSBC chief executive, said on a conference call.

By 10:40 a.m. its shares were down 0.2 percent at 745 pence. Its shares are down 12 percent this year, while the DJ Stoxx Europe bank index has more than halved.

Jane Coffey, head of equities at Royal London Asset Management (RLAM), said there were no nasty shocks in the update and HSBC remained well positioned.

"They have a loan to deposit ratio of 88 percent, strong capital ratios, they are not dependent on government support and they are still paying a cash dividend.

"All those things make it more expensive than other banks, but you can understand why you are prepared to pay that premium," Coffey said. RLAM is the 21st biggest investor in the bank, according to Thomson Reuters data.