As the first blue chip kicking off the new round of the reporting season next Monday, HSBC's net profit is projected to rise 15 percent compared with the first quarter of last year, according to the mean estimates of analysts surveyed by The Standard, on top of one-off gains of up to US$2.3 billion coming from the sale of the bank's London headquarters and valuation gains from the initial public offerings of the bank's mainland affiliates.

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The bank will report revenue grew to US$36.32 billion, up 11.2 percent from the same period last year.

Net interest income will rise to US$17.79 billion, up 6 percent, according to mean estimates. Non-interest income is expected to rise 17 percent to US$18.54 billion.

Earnings should benefit from US$1.2 billion in exceptional pre-tax profit, as well as strength in Hong Kong and Asian operations, said JPMorgan's Sunil Garg.

"While a narrowing prime-Hong Kong interbank offered rate spread has impacted lending spreads, deposit spreads have benefited and HSBC is likely to report stable margins," he said.

"In addition, strong equity markets have boosted brokerage and wealth management fees."

Asia has renewed focus within HSBC, and has received a high share of investment spending, according to Credit Suisse's Bill Stacey. "With buoyant markets and trade flows, a strong contribution from China affiliate companies and relatively high loan growth in most markets, Asia is likely to deliver the highest growth in the group," Stacey said.

The corporate, investment banking, markets and commercial lending businesses will make up the largest portion of this growth.

"We expect more focus on growth in the consumer business, as comparisons are made with competitors," Stacey said, adding that investors will also start to look for differences in emphasis with the transition to a new management in Asia.

North America is expected to disappoint again. "We see little new information that would change the outlook for HSBC's large US real estate lending exposures," Stacey said.

He expects the US consumer finance business to record impairment charges of 65 percent above that seen in the first half of last year.

The key parameters to watch are how high delinquencies rise, the severity of losses, and "the extension of problems outside second-lien and correspondent-initiated mortgages."

"We look for delinquencies on the total portfolio to rise 43 basis points [to 4.16 percent] in 2007, with a higher increase in the second quarter than the five basis point deterioration in the first quarter," he said.

According to Garg, the United States is a pressure point, but recent subprime woes will manifest themselves mostly in the second half.

"We would urge investors not to be complacent about second-half credit risks," Garg said.