HSBC profit up as US bad debt charge jumps
Thursday, 15 November 2007
LONDON, Nov 14 (Reuters): HSBC Holdings Plc, Europe's biggest bank, said its third-quarter profits were ahead of last year's and revenue growth across the group offset a jump in its charge for bad debts in the United States.
The trading update Wednesday reassured investors that HSBC was not further exposed to big debts in mortgage-related financial products and was benefiting from its broad spread, and its shares jumped over 4.0 per cent.
The bank does not report quarterly results and is not due to announce annual results until March 3, 2008.
HSBC increased its bad debt charge related to its US consumer finance business to US$3.40 billion for the third quarter, which was higher than analysts had expected and up from $2.20 billion in the second quarter.
The charge was $1.40 billion more than had been implied by extending first-half trends. HSBC said half of that was due to deterioration in the subprime housing market and the remainder was because problems had spread to unsecured lending, such as credit cards and personal loans.
"Things are getting worse (for US consumers) and numbers are going to have to come down because provisions are higher than expected. There's a pretty serious headwind it's walking into," said Simon Maughan, analyst at MF Global.
HSBC Finance Director Douglas Flint said the impairment charge "will stay elevated and could increase" if the housing market continues to weaken and the bank said the outlook was "genuinely uncertain."
The trading update Wednesday reassured investors that HSBC was not further exposed to big debts in mortgage-related financial products and was benefiting from its broad spread, and its shares jumped over 4.0 per cent.
The bank does not report quarterly results and is not due to announce annual results until March 3, 2008.
HSBC increased its bad debt charge related to its US consumer finance business to US$3.40 billion for the third quarter, which was higher than analysts had expected and up from $2.20 billion in the second quarter.
The charge was $1.40 billion more than had been implied by extending first-half trends. HSBC said half of that was due to deterioration in the subprime housing market and the remainder was because problems had spread to unsecured lending, such as credit cards and personal loans.
"Things are getting worse (for US consumers) and numbers are going to have to come down because provisions are higher than expected. There's a pretty serious headwind it's walking into," said Simon Maughan, analyst at MF Global.
HSBC Finance Director Douglas Flint said the impairment charge "will stay elevated and could increase" if the housing market continues to weaken and the bank said the outlook was "genuinely uncertain."