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HSBC says a 'resilient' performance has helped lift first-quarter profits

Banking giant HSBC has said that a "resilient" performance had helped lift first-quarter profits despite an extra 5.8 billion US dollars (£3 billion) in credit crunch losses.

The bank took the losses on bad debts from its US consumer finance business and write-downs on mortgage-backed investments hit by the financial turmoil.

HSBC said it had increased pre-tax profits in all major emerging markets such as Asia and the Middle East - but added that the outlook for 2008 was "unusually difficult" to predict and said a US recession was "increasingly likely".

HSBC chairman Stephen Green said the bank's global presence and range of businesses "are allowing us to support our customers in today's challenging market conditions".

The update was also well-received by investors, with shares in the bank rising more than 2%.

Mr Green was upbeat after record quarters for the group's commercial banking and private banking division, despite the continued problems in the US business, HFC.

HSBC said it saw higher losses across its US business as the economy veers towards recession, although bad debt levels were in line with management expectations.

Chief executive Michael Geoghegan said the pace of growth in bad debts had slowed, but this could be due to seasonal factors.

In 2007, the bank's total bad debt and credit provisions hit 17.2 billion US dollars (£8.7bn).

But the bank remains gloomy on the prospects for the US housing market, where soaring defaults among borrowers shattered confidence in investments based on the loans last summer - sparking the current credit crisis.