Global banking giant HSBC yesterday said "disenchantment" with Royal Bank of Scotland (RBS) and Lloyds Banking Group had helped it recruit customers north of the border as it reported a doubling in first-half profits to $11 billion (£7bn).
The bank said it had witnessed a 44% increase in the number of small businesses switching to it in Scotland.
Total revenue north of the border also rose by 23% against a 7% fall in its wider European business, with HSBC saying it had filled a gap left by other banks.
It had particular success in Aberdeen, Alan Keir, chairman of HSBC’s Scottish advisory board said, with the city’s "micro- economy" helping it escape much of the recession.
Keir told The Herald: "In Scotland it is going extremely well indeed. I think there are significant opportunities for us there."
Elsewhere, HSBC executive director Stuart Gulliver said gross new lending to what the bank classes as SMEs – those with turnover of greater than £25 milion – was up by £1.4bn, or 38%, in the first six months of the year against the same period of 2009.
But he acknowledged: "Net lending is more or less flat. About the same number of people repaid us as took new lending."
Despite this, HSBC’s profit for the period easily beat analysts’ expectations of around $9bn, with pre-tax earnings coming in at $9.6bn – an increase of 30%.
The key driver was a fall in loan impairment charges and other provisions to $7.5bn, some $6.4bn less than the charge reported this time last year.
Chief executive Michael Geoghegan said: "I hope we are through the worst for loan impairment charges."
The company was profitable in every region apart from North America, where pre-tax earnings narrowed by $2bn to $80m as bad debts eased.
Asia, meanwhile, accounted for $5.9bn, or 58%, of the bank’s overall profit.
Geoghegan, who relocated to Hong Kong in January, said: "Asia remains the bedrock of our profitability."
HSBC last month boosted its presence in the region by purchasing a retail and corporate banking business in India from RBS.
While Asia continues to be strong, Geoghegan said the global outlook was "uncertain".
"Whether the West can sustain growth will remain unclear for some time," he explained. "We remain bullish on emerging markets. Led by Asia, they will continue to drive world growth."
He added: "Until the US feels confident about its economy the rest of the world will have to have its doubts."
HSBC’s investment bank, meanwhile, made a profit of $5.6bn, its second-best half ever, but down 13% from a year ago.
Gulliver, chief executive of the division, said that $2.5bn in employee expenses booked by the arm was inflated by a $350m payroll tax to pay bonuses earlier this year.
He added that investment banking pay was down to 21% of revenues from 24% a year ago even though HSBC had hired 400 new investment bankers this year.
Elsewhere, HSBC’s Tier 1 capital ratio was 11.5% at the end of June, well above its target range.
The bank will review its aim of a return on capital of 15% to 19% once regulators decide how much of a cushion banks should carry.
While Geoghegan warned that HSBC’s extra capital would depress returns, he said it could still achieve the lower end of its targets over the medium term.
He added that an agreement on banking reform by the G20 nations would help the market.
"A level playing field is beneficial for all global markets," he said.
"That’s why all G20 countries must participate according to the same rules."
HSBC’s results sent shares in the company soaring 34p, or 5.3%, to 680p.
The other banks followed.
RBS closed up 2.14p, or 4.3%, at 52.1p, above the break-even level for the Government’s 83% stake.
Lloyds finished at 72.44p, up 3.18p or 4.6%.
Barclays closed up 11.15p, or 3.4%, at 343.95p.