Larger-than-expected consumer defaults in the US prevented HSBC Holdings' full-year profits extending beyond five per cent, the bank said today.
The London-based bank, one of the world's largest, saw a $725 million (£376.9 million) fallback in its US personal businesses' pre-tax profits, caused by heavy "risk concentration" which had developed in the last two years.
But strength in the bank's expanding operations, notably in Latin America and the Middle East, helped overall pre-tax profits rise from $20.9 billion (£10.9 billion) in 2005 to $22.1 billion (£11.5 billion) last year.
"It is a testament to HSBC's strength and diversity that we grew pre-tax profits in 2006 to $22 billion, despite a major setback in part of our mortgage business in the United States," group chairman Stephen Green said.
Looking ahead, HSBC said its outlook remained "encouraging" as the process of globalisation continued to open up new markets.
"The most significant risks to continuing growth currently relate to political and macro events which are outside our control," it noted, before emphasising that it sought to mitigate such risks by remaining "strongly capitalised and liquid".
Shares in HSBC Holdings rose by 1.3 per cent on early morning trading.
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