HSBC has reported profits of $14.4 billion (£7.68 billion), breaking a UK record set three weeks ago by Royal Bank of Scotland. Caroline Merrell, Banking Correspondent, says that this is not a case of ripping-off the consumer.

How has HSBC been able to make these profits?

It spent $14 billion on a large acquisition in the United States, called Household International, in addition to buying Mexican and Bermuda based banks.

HSBC also benefited from the rise in the rate of consumer borrowing around the world, in addition to reaping benefits from an economic recovery in one of its core markets, Hong Kong.

Its investment banking division also produced a sharp rise in profits because of the recovery in global stock markets. Trading commission rose strongly at the investment banking division,

How is this linked to large profits at RBS?

Both banks have benefited from soaring consumer borrowing. In RBS's case this has been in the UK, in HSBC's case it has been around the world, particularly in the US and in Britain.

Both banks have benefited from an incredibly benign economic environment. Interest rates remain low, and there is little sign of a pick-up in bankruptcies in core markets such as America and Britain.

Both banks have also made a large amount of money from lending to corporates, in RBS's case it is in Britain, in HSBC it is around the world.

What does all this mean for British customers? Is this at their expense?

In the UK, there is huge competition for products. The costs of borrowing have come down, consumers are just choosing to borrow much more than before.

Although the initial feeling is that profits of this size must mean that UK consumers are being ripped off, HSBC only makes £70 a year from each UK customer, less than most of the other British banks.

The bank also pays a huge dividend directly to many pension funds. Where many companies are cutting their dividends, HSBC is raising theirs.

How does HSBC rank as a bank?

It the UK's biggest, and the world's second biggest. It ranks above J P Morgan Chase, which is in the process of merging with Bank One, and is bigger than HBOS, Lloyds TSB, Barclays and RBS. It is smaller only in market capitalisation than Citigroup, the world's biggest financial services company.