Banking giant HSBC today unveiled annual profits of £9.18 billion - the biggest figure recorded by a UK-based bank.

The group, which generates around one-fifth of its earnings from the UK, said it had been "another good year" after the profits figure rose 37 per cent compared to 2003.

Today's results come a week after Royal Bank of Scotland unveiled profits of £8.1 billion and will be followed later this week by Halifax to Bank of Scotland group HBOS, and Lloyds TSB.The biggest banks in the sector are expected to have accumulated profits of around £30 billion in 2004.

But thousands of HSBC workers could go on strike in a row over pay, which was made worse by the bank's huge profits, it was warned today.

Amicus said it was planning to ballot 20,000 staff for industrial action unless the dispute was resolved.

The union said it was preparing to stage a walk-out to coincide with the company's annual meeting in May.

The union said it was calling on its members to prepare for industrial action after talks held at the conciliation service Acas failed to break the deadlock.

Around 10 per cent of workers will receive no pay rise this year and a further 40 per cent would be given a below inflation rise with the rest receiving 3.5 per cent, the union complained.

Last week, the industry came under fire from former London Stock Exchange chairman Don Cruickshank, who said he believed nothing had been done to boost competition among banks since he carried out a review five years ago.

HSBC sounded an upbeat note on prospects and said some of the concerns which made for an uncertain economic outlook in 2004 had been "allayed to a degree".

Chairman Sir John Bond said of today's figures: "The solid performance of the first six months continued and we were able to build on the record results of 2003."

In Britain, HSBC said profits increased by 16 per cent, or £348 million, to £2.59 billion. The improvement came after achieving growth in a number of key areas, such as consumer lending, credit cards and mortgages.

Excluding the addition of Marks & Spencer's credit card portfolio in November, HSBC said card balances increased by 19 per cent on a year earlier.

Residential mortgage balances were 20 per cent higher at £27.5 billion as HSBC improved its market share in the sector to 4.2 per cent, from around 3 per cent.

The charge for bad and doubtful debts in the UK was 13 per cent lower than in 2003, as recoveries in the corporate sector offset higher levels of UK personal bankruptcies.