Branching out in the US helped lift HSBC profits

Pre-tax profits in the six months to the end of June rose to $6.8bn (�4.3bn) from $5.4bn a year earlier.

The company said the $14bn purchase of US lending company Household International had helped fuel the rise.

It added it would be using Household to tap into the immigrant market, which has been overlooked by many banks.

But the acquisition has seen the group's bad debts rise to $2.4bn from $715m, with the Household unit responsible for $1.5bn.

Controversial buy

The buy caused controversy when HSBC decided to appoint Household's chief, William Aldinger to its board.

His �37m three-year pay package was targeted by a "fat cat" pay row campaign.

The TUC urged HSBC shareholders to vote against Mr Aldinger's pay deal, claiming he could get up to �20m if he was dismissed.

But HSBC dismissed the criticism saying the package represented good value for money.

Spokesman Adrian Russell added: "We wanted to keep him running the company for at least a few years to help integrate it into HSBC. This is a very talented man."

Expansion plans

The bank also unveiled plans to expand in the emerging economies of Asia - including India and China, Mexico, Brazil and the Middle East.

In the UK, where the firm is one of the country's "big four" banks, HSBC said it had gained market share and significantly increased fee income.

But while it managed to stave off the effects the Iraq war, HSBC did warn it was readying itself for a "modest and uneven" economic recovery, as current data had provided mixed signals.

The bank said: "Prospects for the rest of 2003 are reasonable though we remain cautious about the longer term outlook because of structural imbalances in the world's major economies."