HSBC'S pre-tax profits fell 14 per cent due to a sizeable hit from its exposure to the economic crisis in Argentina.

Provision for bad and doubtful debt doubled to £1.41bn, with about half linked to the South American country.

That put HSBC's annual pre-tax profits down to £6.21bn from £7.3bn a year earlier.

The bank, which has operations all over the world, said its outlook for the year ahead remained "cautious".

Chairman Sir John Bond warned the robust consumer demand which has supported many western economies may prove hard to maintain.

He added: "Much will depend on the pace of recovery in the US. Recent economic indicators provide mixed signals."

HSBC said its UK operation had performed well, with pre-tax profits up 12 per cent at £2.29bn.

The bank's drive to capture more of the UK mortgage market showed signs of reward with HSBC's largest ever share of net new lending at 4.4 per cent.

Savings balances at HSBC Bank and its telephone and Internet operation First Direct rose by 30 per cent.

Sir John said: "The UK remained fundamentally strong despite the effects of the foot-and-mouth epidemic and the downturn in the manufacturing sector."

However, HSBC said its experience since boosting its presence in Argentina four years ago had been "extremely disappointing".

The group took a hit of £422m for bad debts in Argentina and added a £366.3m loss because of the country's foreign currency redenomination.

About half a percentage point of HSBC's total assets are tied up in Argentina butthe group maintained that the risks were "entirely manageable".