From Bloomberg

HSBC Holdings Plc, Europe’s biggest bank by market value, said first-half profit rose 9 percent, helped by increased lending.

Net income rose to $7.6 billion from $6.94 billion a year earlier, the London-based bank said today in a Regulatory News Service statement. That surpassed the $7.09 billion median estimate of nine analysts surveyed by Bloomberg.

Chairman John Bond is expanding in China, Brazil and the U.S., and building up HSBC’s investment banking business to spur growth as Britain’s economy slows. An expansion in the U.S. economy, which grew at an annual 3.4 percent pace in the second quarter, helped buoy consumer lending.

“The focus on managing for growth has resulted in a substantive acceleration of its lending,” Amit Rajpal, an analyst at Morgan Stanley in Hong Kong said in a note before earnings were released. HSBC “has opportunity to gain market share in most of its key markets,” he said.

HSBC shares have gained about 5 percent this year, trailing the 10 percent advance of the 78-member Bloomberg Europe Banks and Financial Services Index. The company’s $104 billion market value is second among banks worldwide to New York-based Citigroup Inc.

Of 13 analysts who published a recommendation on the stock in the past three months, four have “buy” ratings, six have “holds” and three have “sells,” data compiled by Bloomberg show. HSBC beat analyst estimates by an average of 9.4 percent during the previous four reporting periods.

HSBC published earnings based on International Financial Reporting Standards for the first time.

U.K. Lending

Bond spent $2.8 billion over the past year to buy stakes in a Chinese bank and insurer. The bank also acquired credit-card businesses in the U.S., Britain and Brazil. HSBC’s securities unit added more than 500 investment bankers in 2004, mostly in the U.S., to help win fees advising on derivatives, stock sales and mergers.

Loan losses are rising in the U.K., where the bank gets a quarter of its profit. They jumped 26 percent to $3.45 billion in the second-half of 2004 from the first half.

Demand for credit in the U.K. is also slowing. Lending to households increased in June by the second-smallest amount this year, the Bank of England said July 29. Consumer borrowing slowed to 1.28 billion pounds in June from 2.02 billion pounds in May.

U.K. house prices fell for an 11th month in June, a report from the Royal Institution of Chartered Surveyors showed, following a decade-long housing boom that led to a doubling in prices. Record household debt of more than 1 trillion pounds and “continuing rapid lending growth” leave banks vulnerable to any sudden slowdown in the economy, the Bank of England said last month.

Investment Banking

At the investment banking business, HSBC’s hiring has pushed up costs. Bond, 64, appointed John Studzinski, 49, and Stuart Gulliver, 46, as co-heads of investment banking two years ago to lead the expansion.

“Cost growth here should be significant,” Keith Irving, an analyst at Merrill Lynch said in a note on July 27.

HSBC’s corporate, investment banking and markets division spent 56.5 cents for every $1 of revenue in 2004, up from 48.9 cents the year before, according to company reports. The figures aren’t based on IFRS accounting rules.

Finance Director Douglas Flint said on a conference call with analysts on May 31 that the unit is gaining clients in bond sales, derivatives and foreign exchange, even as markets for some of its products slow.

Those gains helped offset a slowdown in fixed-income markets and “tail-off” in some trading businesses at the end of the first quarter, said Flint. HSBC hasn’t seen improvement in its mergers advisory business, where it ranked 28th in the first half, down from 24th in the same period of 2004, Bloomberg data show.

HSBC ranked ninth in managing euro-denominated bond sales during the first half, with a 4 percent market share, up from 12th in the first half of 2004, when it had 2.9 percent of the market, Bloomberg data show.