Competition in the UK shows no sign of abating, and structural changes here and in Hong Kong suggest a testing environment ahead

Sir John Bond chairman, HSBC

Bank chairman Sir John Bond warned that competition in the UK banking market "shows no sign of abating".

"Structural changes here and in Hong Kong... suggest a testing environment ahead," he said.

Sir John also warned that the slowdown in American economic growth would have "an effect" on economies worldwide, and particularly those "which depend on exports to the US".

HSBC, which aims to reap earnings broadly equally from industrialised and emerging states, has a particularly broad geographical spread of operations.

Credit card boom

The comments came in an investors briefing which revealed a 28% rise in pre-tax profit to �7.1bn ($10.3bn) last year.

Results snapshot - HSBC

Pre-tax profit: $10.3bn (+28%) Interest income: $13.7bn (+14%) Other income: $10.8 (+20%) Geographical spread of profits Europe: 39% ($4.02bn) Hong Kong: 35.9% ($3.69bn) Rest of Asia-Pacific: 12.3% ($1.27bn) North America: 9.6% ($0.99bn) Latin America: 3.2% ($0.32bn) Data for year ended 31 Dec

The figures were boosted by the acquisition last year of a French bank, Credit Commercial de France (CCF).

HSBC's Asia operations also turned in a strong performance, with a reduction in the bad debts that built up during the Asian financial crisis in the late 1990s.

The bank issued 1 million new credit cards in the region last year to exploit a revival in consumer spending.

But some investors had been expecting the bank to raise earnings further, and said second-half performance, particularly in fee income, had disappointed.

HSBC shares closed down 72p at 955p.

The shares had proved one of the best performers among major UK stocks of late, rising from 723p a year ago to 1027p at Friday's close.

Earnings balance

Sir John added that HSBC had previously responded well to difficult conditions, and that he was "confident" the bank could do so again.

The integration of CCF was proceeding smoothly, he said.

"We are already seeing benefits in terms of increased revenues and favourable customer reaction."

Last year, the bank's Europe operation led profits increases, with a 39% rise, followed by Hong Kong (36%).

Internet expansion

Sir John also announced a surge in internet banking operations.

We started 2000 with internet banking live only in Brazil, and with 200,000 registered users. Today we have 1.5 million users

Sir John Bond

"We started 2000 with internet banking live only in Brazil, and with 200,000 registered users," he said.

"Today we have 1.5 million users", in 150 nations and territories worldwide.

"Our principal objectives for 2001 are to broaden our customer base and to deepen the relationship we have with our customers," Sir John said.

"We shall expand internet banking for personal customers to at least 10 more countries."

Bad debts

HSBC's charge for bad and doubtful debts was $932m, 55% less than in the previous year.

The group pre-tax profit figure of $10.3bn excluded goodwill amortisation.

After goodwill amortisation, group pre-tax profit stood at $9.78bn, up 22% on 1999.