HSBC announces 2008 full year results

Profit before tax of $1,746m for the year ended 31 December 2008, up by 34% from $1,307m in 2007. Customer deposits of $35.2bn for the year ended 31 December 2008, up by 14% from $30.9bn in 2007. Loans and advances to customers of $27.3bn for the year ended 31 December 2008, up by 26% from $21.6bn in 2007.

HSBC in the Middle East recorded profit before tax of $1,746m for 2008, representing a 34% increase compared with 2007. Net interest income increased by over 40% compared with 2007. Deposit growth, notably in Personal Financial Services, supported a strong rise in corporate and personal lending. The increase in corporate lending was mainly driven by increased trade and infrastructure investment in the region.

Fee income increased by almost 50% compared with 2007, mainly from fees for personal credit cards, trade and supply chain services, credit facilities, custody and corporate finance. Growth in net trading income was up by over a third compared with 2007, primarily due to increased foreign exchange sales driven by robust client demand and higher volatility in Middle East currencies.

Operating expenses of $956m were up by $184m, or 24%, reflecting substantially increased levels of operating volumes and related headcount as we continue to invest in long term growth. Nevertheless, the growth in operating expenses was some 18 per cent less than the growth in net operating income before loan impairment charges.

The notable deterioration of credit quality in personal and corporate portfolios across the UAE in the final quarter of 2008 led to a material increase in loan impairment charges for the full year 2008 compared to the very low levels of 2007.

Increased profits in SABB accounted for over half of the $65m, or 26%, increase in the share of profits from associates.

Youssef Nasr, Chief Executive Officer HSBC Bank Middle East Limited said, "We expect that 2009 will be a particularly challenging year as some parts of the world head into recession. Profitability in the Middle East will come under pressure as the economy slows, loan impairments increase and margins contract in a low interest rate environment.

"Despite these difficulties, we are in good shape. I am confident that with our diversified business model, conservative approach to risk, excellent local coverage and access to HSBC's unique global distribution networks, we are well-positioned to build on our strengths to ensure the region remains a key element of the Group's strategic focus on fast-growing markets. We thank our valued customers for their continued support and our staff for their commitment and contribution to the bank's success," he added.