HSBC profits rise, takes another $3.2 bln in write downs

"HSBC has made a strong start to the year despite the turbulence in global financial markets. In the first quarter of 2008, HSBCs profit was ahead of the equivalent period last year," it said in a trading update.

Europe's biggest bank added that the subprime write down was in line with the group’s forecasts and was lower than the $4.6 billion that was written off in the fourth quarter of 2007.

The bank said pre-tax profits advanced in all major emerging markets in Asia-Pacific, the Middle East and Latin America but it gave a downbeat outlook for 2008. "The outlook for the rest of the year remains unusually difficult to foresee in the current environment," said HSBC Chairman Stephen Green.

"It seems increasingly likely that the U.S. will enter a recession in 2008, the length and depth of which is uncertain," he said. "The timing of any recovery in the U.S. housing market, which is likely to be the primary stimulus in restoring confidence to the U.S. economy, is also unclear."

HSBC said that profits at its U.S. division sank in the first quarter "as a result of higher consumer finance loan impairments and additional write downs."