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HSBC Profit Up on Year Despite $4.9 Billion US Hit

Europe's biggest bank HSBCHoldings said its profit in the third quarter was ahead of a year earlier as growth in Asia helped offset almost $5 billion in bad debts on U.S. home loans and asset write downs.

HSBC said its profits in the nine months to the end of September were lower than the same period of 2007.

Its tier 1 capital ratio was 8.9 percent at the end of September, near the top of the bank's 7.5-9 percent targeted range, and the bank said it was "a major recipient" of deposit inflows in the current financial market turmoil.

HSBC said global economic growth will continue to slow during "the next few quarters as recession takes hold in several mature economies".

Kirsty Wigglesworth

Asian growth will slow but is likely to remain "relatively more resilient", it said.

Its shares were down 0.6 percent at 742 pence.

HSBC said its charge for bad loans in personal financial services in the U.S. rose to $4.3 billion in the quarter, up by $700 million from the previous quarter.

It had been expected to report another near $4 billion on bad U.S. home loans as its mortgage book is run down and unsecured losses pick up as unemployment rises.

It wrote down the value of credit trading positions by $600 million in the quarter, lower than write downs in the previous two quarters partly due to changes in accounting rules.

HSBC and other banks have reclassified how some assets are accounted for under new rules.

Without the reclassification HSBC said its third-quarter write down would have been $835 million higher.

Bad debts also rose in its European retail business.