HSBC Holdings, Europe's largest banking group by market value, today reported a 70 per cent drop in its net profit and announced plans to raise $17.7 billion fresh capital through a share issue and cut 6,100 jobs in the US.

In 2008, net profit tumbled to $5.7 billion from $19.1 billion a year earlier as the company wrote down the value of assets, particularly in the US.

HSBC reported a 62 per cent drop in 2008 pre-tax profit at $9.31 billion against $14.91 billion in 2007, even as it said its India business grew by as much as 26 per cent during the same period.

Net interest income, however, was up $4.77 billion, or 13 per cent higher, at $42.56 billion in 2008 compared to 2007.

Net operating income before loan impairment charges and other credit risk provisions of $81.68 billion was $2.69 billion, or 3 per cent, higher than in 2007.

Total operating expenses (excluding goodwill impairment) of $38.54 billion declined by $507 million, or 1 per cent, compared with 2007. On an underlying basis, and at constant currency value, operating expenses were broadly unchanged.

Loan impairment charges and other credit risk provisions were $24.94 billion in 2008, $7.70 billion higher than in 2007.

The tier 1 ratio and total capital ratio for the group remained strong at 8.3 per cent, down from from 9.3 per cent a year earlier, and 11.4 per cent, respectively, at 31 December 2008.

The bank said the planned $17.7 billion rights issue would boost its capital to 9.8 per cent.  (See: HSBC to raise $20 billion through rights issue)

The group's total assets at 31 December 2008 were $2,527 billion, an increase of $173 billion, or 7 per cent, since 31 December 2007.

Excluding goodwill impairment. The cost efficiency ratio including goodwill impairment was 60.1 per cent.

HSBC said it would shut down its housing finance company in the US, causing a loss of 6,100 jobs, scale back consumer lending in the  and shrink its consumer loan business there, HSBC's branch banking business in the US will remain, it added.

HSBC said borrowing from the market would help avoid the strings that go with the government bailouts given to other British banks. It also said it would cut its dividend and not pay bonuses to top three executives, including CEO Mike Geoghegan.