HSBC says much of 2010 will be challenging

Europe's biggest bank HSBC Holdings said on Friday it intended to continue to pay quarterly interim dividends but added that business would remain challenging during much of 2010. "Turning to the outlook. The rest of 2009 and probably much of 2010 will be challenging," Chief Executive Michael Geoghegan said at the bank's annual shareholder meeting.

HSBC said its financial strength and conservative positioning had helped it to withstand the financial storm and that there were signs of stabilisation and returning appetite for risk among investors.

"We positioned ourselves for the downturn early in many markets, including the UK, and this should help us to avoid the worst of the excesses," Geoghegan said.

"But, as banks are fundamentally a reflection of the economies they serve, we will share that pain."

At 1056 GMT, the shares were roughly flat at 541 pence, as the Dow Jones Stoxx index was up 0.8 percent.

HSBC was one of the most profitable banks in the world in 2008, albeit at a lower level than 2007, Chairman Stephen Green, said at the meeting.

HSBC has weathered the crisis better than most rivals thanks to a traditionally strong balance sheet and strong liquidity due to a high level of deposits in Asia.

It said two weeks ago its first quarter profits were "well ahead" of last year, swelled by record results in its investment bank and resilience in Asia, although they would have been down without accounting gains on its debt.

Bad debts in the first three months of the year rose from a year ago but were lower than in the previous quarter.

Impairments in the bank's troubled U.S. consumer finance business, which HSBC is in the process of running down after losing billions in the last three years on soured subprime housing loans, totalled $3.9 billion in the first quarter.