LONDON — HSBC Holdings PLC Monday said third-quarter pretax profit was ahead of the year-earlier period, with Asia still being the core driver of growth.

In the U.S. consumer finance business, which has been HSBC's hardest hit unit in the credit crisis, the bank said results were in line with its expectations but that current trends point to further deterioration in the near to medium term.

"Recovery depends on the success of further economic stimulation, which is likely to take some time to take effect, but we were early in positioning ourselves for this downturn," Chief Executive Michael Geoghegan said in a statement.

Impairment charges at the U.S. business, HSBC Finance Corp., amounted to $4.2 billion in the third quarter, bringing accumulated impairments there to $10.77 billion in 2008. Geoghegan said he still thinks it will take until about 2010 to work through the subprime impairments in the U.S.

Hargreaves Lansdown Stockbrokers analyst Richard Hunter said the contribution from HSBC's Asian operations has "very much cushioned the blow" from another set of U.S. home-loan write-downs.

Collins Stewart analyst Alex Potter said the results were in line with expectations, and that the "muted" outlook statement was hardly a surprise, while Keefe, Bruyette & Woods analyst James Hutson said earnings are likely to ease on higher impairments across the books. Hutson said HSBC's funding position is "sound" and the capital level is "comfortable."

At 1146 GMT, HSBC's shares were up 2.8 pence, or 0.4%, at 749 pence. HSBC has outperformed peers and is down only 11% on the year, compared with other U.K. banks having slipped 46%-85% in the past 12 months.

In the third quarter, HSBC' net interest income grew at the same rate as in the first half of the year, while net fee income declined "moderately," due largely to weaker equity market-related income.

Loan impairment charges rose, both from last year and from the first six months, driven by continued U.S. housing market weakness, rising unemployment and underemployment. Impairments also rose in commercial banking, while exposure to a single European property company resulted in a rise in loan impairments in global banking and markets.

In Asia, which has offset the impairments in the U.S. in the past year, there were signs of slowdown, with personal financial services revenue declining in Hong Kong on lower deposit margins. Commercial banking revenue "held up well" in Hong Kong, and both personal and commercial banking revenue grew strongly in Asia Pacific. There were some increases in impairment charges.

HSBC, along with U.K.'s other Asia- and emerging markets-focused bank Standard Chartered PLC, didn't have to raise capital in lieu of the U.K. government's wide-ranging plan in October to re-capitalize and guarantee funding for the banks.

It did, however, inject GBP750 million into U.K. subsidiary HSBC Bank PLC to fulfill the new government requirements.

On Monday, HSBC said its Tier 1 capital ratio at the end of September was 8.9% compared with 8.8% at the end of June. HSBC had a loan-to-deposit ratio of 88% compared to 90% at the end of June, meaning it still has more deposits on hand than loans and can fund lending easily.

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