HSBC, the UK-listed bank which recently announced it was re-branding its private banking arm, said this division made a pre-tax profit in 2008 of $1.447 billion, a fall from $1.51 billion from the previous year.

The bank, which has managed to navigate the credit crisis with fewer losses than some of its rivals, said for the group as a whole, its pre-tax profit, excluding goodwill impairment, was $19.9 billion, a fall of 18 per cent over the year.

The bank said it had a Tier 1 capital ratio of 8.3 per cent at the end of the year. Meanwhile, in a move to bolster its capital strength, the bank announced a rights issue, comprising £12.5 billion ($17.7 billion) to increase its capital ratio strength by 1.5 per cent. The move is subject to investor approval on 19 March.

HSBC logged loan impairment charges and other credit risk provisions of $24.937 billion in 2008, a rise of $7.695 million from the levels recorded in 2007.

At the private bank, HSBC said this unit “continued to perform strongly” last year. Pre-tax profit held up well at just 4 per cent below 2007's record figure. Strong revenue growth in Europe, especially in  Switzerland and the  UK, was offset by reduced trading income in  Asia, lower fee income, higher staff costs and loan impairment charges and other credit risk provisions. 

Client assets fell by 16 per cent to $352 billion, despite strong net new money flow of $24 billion of which $16.5 billion was in  Europe. The decline in market values in all regions was the major reason for this decline.

Although total client assets under management fell as a result of economic conditions, HSBC attracted net new money of $30 billion. Intra-group referrals resulted in $6.8 billion of net new money, compared with $5.7 billion in 2007. 

The bank continued to build its rivate banking franchise, opening offices in  Guangzhou,  Shanghai and  Beijing, in mainland  China, and expanding its domestic business in other emerging markets, especially  India,  Panama and  Brazil.

Commenting on the results, Stephen Green, chairman, said: “The industry has done many things wrong. It is important to remember that many ordinary bankers have always sought to provide good service to their customers; but we must also recognise that there have been too many who have profoundly damaged the industry's reputation.”

“Inappropriate products were sold inappropriately by many. Compensation practices ran out of control and perverse incentives led to dangerous outcomes. There is genuine and widespread anger that the contributors to the crisis were in some cases amongst the biggest beneficiaries of the system,” he said.

Mr Green continued: “The  US remains the world's largest economy and HSBC remains committed to the  US, which we see as a core market for HSBC. HSBC Bank in the  US is not affected by the restructure. In the immediate future we will focus on those businesses and customers for whom our global connectivity gives us advantage - primarily in corporate and commercial business, and in Private and Premier banking.”

HSBC said it continued to focus on serving affluent customers using the wealth management service of the bank. Its HSBC Premier client base now has 2.6 million customers, up 22 per cent on 2007. Eight out of ten new Premier clients were new to HSBC.