HSBC yesterday unveiled hsbc.com, its global internet bank, ahead of tomorrow's launch of hugely discounted products by the new internet arm of First Direct, HSBC's profitable telephone bank in the UK.
The London-based bank with operations in 82 countries refused to put a figure on the cost of launching hsbc.com but said it would spend $2bn (£1.25bn) on technology this year, a rise of £187m on last year.
It also said it had set aside £200m to cover bad debts in Korea, the majority of which analysts believe are connected to Daewoo, the car company.
Overall, however, HSBC's bad debt charges fell £355m to £1.25bn in 1999 as economies in Asia, where 38% of its business is based, regained some stability. The group's pre-tax profits rose by 21% to £5bn although profits in the UK banking business, formerly known as Midland, rose less quickly.
The UK bank reported operating profits of £1.3bn, up 1%, restrained by the dollar-sterling exchange rate, the provision against the Korean debtor and another £15m to cover pensions misselling.
Costs in the UK bank operation also rose, mainly because of bonus payments to the traders in its treasury operation. Up to 5% of the UK bank's administration is now handled in China.
Within the UK bank, First Direct, launched 11 years ago as a pioneering telephone operation, reported an £18m rise in profits to £25.8m. First Direct broke even in 1994 after amassing start-up costs of £124m.
Sir John Bond, chairman of HSBC, said First Direct would announce its new, "fiercely competitive" internet products tomorrow. The City believes the products could represent moves by First Direct to offer market-beating rates.
Sir John insisted HSBC's strategy was different to its rivals, all of which announced internet banks during the past fortnight's annual bank reporting season. HSBC already has 400,000 internet customers. "The opportunities of e-commerce change the fabric of the way business is done in financial services," Sir John said.
HSBC, which plans more advertising based on its red hexagonal brand, has already spent the past 18 months developing hsbc.com with IBM. Together, they have created a computer package called IFS to link all its operations.
Sir John said the strategy also involved forming partnerships such as the one with Identrus, an electronic signature company, as well as taking direct stakes in internet firms.
In the UK, HSBC already has 55,000 of its customers signed up to Open, the Sky-led digital television consortium in which HSBC has a stake. It is aiming for 1m hsbc.com customers in a year.
Sir John said the group was not just chasing retail customers. "One of the most exciting markets in the e-age is the commercial market, the small and medium sized enterprises that form a vital part of our strategy and long-standing core business," he said.
The group, which bought the private banking business of billionaire Edmond Safra, who died in a house fire last year, said it would take a £100m restructuring charge in 1999 to cover the cost of the purchase.
The bank's shares, listed in London and Hong Kong where 8% are owned by the Hong Kong monetary authority, fell 3p to 720p in London. It announced a second interim dividend of $0.207per share, taking the total to $0.34.
