HSBC profits hit as bad debt surges
Europe’s largest bank announces a 28 per cent drop in earnings as crunch bites
HSBC chairman Stephen Green insisted yesterday that his bank’s performance was “resilient”, despite a 28 per cent fall in profits and a surge in bad debt charges to more than $10bn (£5bn).
Interim pre-tax profits at Europe’s largest bank fell from $14.2bn last year to $10.2bn, the steepest decline for seven years, amid what Green termed “the most difficult financial markets for several decades.”
HSBC also reported $3.9bn of structured credit markdowns in its global banking and markets arm.
The results were broadly in line with expectations, as the bank made up for a $2.9bn loss in its North American arm by remaining profitable in all other geographic regions.
In a conference call, finance director Douglas Flint said delinquencies in its US consumer business were slowing but warned that it was too soon to call the peak of US bad debt.
Flint said HSBC would seek to revive the fortunes of troubled US operation Household, rather than sell it off, but will close its US vehicle finance business in an “orderly run-off.”
In the UK, HSBC had a good period, providing 9 per cent of all new mortgage loans. Flint said HSBC would continue to be cautious in its approach to the UK mortgage market, by lending to “target customers”. The bank refused to confirm rumours that it is seeking a reduction in the $6.3bn it agreed to pay US private equity group Lone Star for control of Korean Exchange Bank.