* H1 pretax profit $11.1 bln vs consensus f/cast $9.1 bln
* H1 bad debts drop to $7.5 bln, better than expected
* Investment bank profits dip, sees slower H2
* Shares up 3.6 percent, outperforms firm sector
(Adds details, background)
By Steve Slater
LONDON, Aug 2 (Reuters) - HSBC's half-year profit more than
doubled from a year ago to easily beat analysts' expectations as
bad debts at Europe's biggest bank fell to their lowest level
since the start of the financial crisis.
HSBC reported a pretax profit of $11.1 billion for the six
months to the end of June, up from $5 billion a year ago and
above the average forecast of $9.1 billion from eight analysts
polled by Thomson Reuters.
Loan impairment charges and other credit risk provisions
fell to $7.5 billion in half-year, down $6.4 billion from the
year ago level.
"The drivers of the lower bad debt performance continue to
be in place," Douglas Flint, finance director, said on a
conference call. "Obviously if we have a double dip then things
will be different, but at the moment the drivers of the first
half continue to be in place."
He cited an improvement among companies, which have
refinanced and raised capital, and in retail banking. "On the
personal side the troubled portfolios in Latin America, the
Middle East and India are running off quite fast and the U.S.
position is running off steadily," he added.
By 0900 GMT HSBC's London-listed shares were up 3.6 percent,
and together with strong results from BNP Paribas helped lift
the European bank sector 2.4 percent.
RETURN TO U.S. PROFIT
HSBC's investment bank made a profit of $5.6 billion, its
second best half ever, but down 11 percent from the record level
of a year ago.
Income slowed in the second quarter from the first quarter,
in line with rivals, and Flint said he expected a slower second
half of the year as appetite has reduced, coupled with seasonal
factors. "We expect slightly reduced appetite and therefore
slightly lower volumes in the second half," he said.
HSBC said it continued to benefit from its increasing focus
on Asia and other emerging markets, which have led global
economic recovery. Asia accounted for $5.9 billion of profits,
or 58 percent of the group.
Its North American business swung to a profit of $492
million from a loss of $3.7 billion a year ago, thanks to a
sharp fall in bad debts in its troubled U.S. business.
HSBC said its Tier 1 ratio was 11.5 percent at the end of
June, well above its target range, and its core Tier 1 ratios
was 9.9 percent. The bank easily passed a so-called "stress
test" of European banks' capital conducted last month.
(Additional reporting by Sudip Kar-Gupta; Editing by Myles
Neligan and Andrew Callus)