HSBC made a profit before tax of $22,086 million, an increase of $1,120 million, or five per cent, over 2005. Net interest income of $34,486 million was $3,152 million, or 10 per cent, higher than 2005. Net operating income before loan impairment charges and other credit risk provisions of $65,366 million was $7,729 million, or 13 per cent, higher than 2005.

For the third year running, return on average shareholders’ equity exceeded 15 per cent, revenue growth was in double digits and the group maintained an essentially flat cost-efficiency ratio at 51.3 per cent. In 2006, pre-tax profits from Asia, the Middle East, Latin America and other emerging markets accounted for approaching 50 per cent of the group’s total.

Despite the issues in the US mortgage business, which are currently being rectified to avoid any repetition, group profit attributable to shareholders of the parent company grew by five per cent to $15,789 million. Earnings continued to be well diversified, both geographically and by customer group. HSBC met their objective of funding organic expansion through productivity improvements.

Achieving this in a year of continuing investment in developing distribution

platforms and product capabilities was a tribute to the focus that HSBC’s 312,000 staff around the world has placed on customer service.

The tier 1 capital and total capital ratios for the group remained strong at 9.4 per cent and 13.5 per cent, respectively, at 31 December 2006.

The group’s total assets at 31 December were $1,861 billion, an increase of $359 billion, or 24 per cent, since 31 December 2005.