HSBC last year suffered a setback in the US mortgage market that would have threatened the future of many smaller financial institutions. So it is a testament to the banking group’s size and breadth that despite writing off a total of almost $11bn in bad debts last year, the bank was able on Monday to report a 5 per cent increase in pre-tax profits to a record $22.1bn.

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Banking Editor Peter Thal Larsen reports on HSBC’s rise in pre-tax profits for 2006, despite a sharp rise in bad debt provisions

Though the figures were broadly as expected, they went some way to restoring investors’ confidence in HSBC, which had been badly shaken by the speed of the collapse in US subprime mortgages, a business which lends to people with poor or patchy credit histories.