HSBC earns better profit behind Asian expansion

The lender not prioritising M&As as it expects to benefit from a rise in interest rates in the Asian-Pacific region due to strong inflationary pressures.

HSBC Holdings PLC's move to prioritize growth in several key Asian markets, including China and India, helped the lender post stronger earnings growth in the region last year beyond Hong Kong, which previously was its biggest profit generator, a senior executive said Monday.

Combined pretax profits for the bank's Asian-Pacific business outside of Hong Kong overtook the city for the first time ever in 2010, said Peter Wong, chief executive of HSBC's Asian arm, underscoring the banking giant's efforts to affirm its position as a pan-Asian lender.

"This is an historic moment," Mr. Wong said in an interview. The change is part of the bank's "plans to balance our portfolio."

HSBC, which was founded in Hong Kong in 1865 and moved its headquarters to London in 1992, has retained significant presence in the former British colony, though it has is in recent years boosted investments overseas, particularly in emerging markets in Asia and Latin America.

HSBC in Asia earlier set six "prioritized markets" outside of Hong Kong with which to focus on higher growth.These markets are: Malaysia, Indonesia, Singapore, China, India and Australia. In particular, China and India were the fastest-growing markets in 2010, registering pretax profit growth of 94% and 82%, respectively.

Pretax profit for the region excluding Hong Kong jumped 41% in 2010 to $5.9 billion from $4.2 billion a year earlier. By comparison, pretax profit in Hong Kong last year rose just 13% to $5.69 billion from $5.03 billion.

View the full story in The Wall Street Journal.