Wednesday, 14 November 2007

HSBC report huge losses

It is hard keeping up with all this bad news from the banking sector. Now it is the turn of HSBC.

HSBC warns loan problems are spreading (FT)

A worsening outlook for the US housing market led HSBC to warn that impairment charges against its mortgage and other consumer finance loans could rise further, after announcing a higher level of charges in the third quarter.

It recorded a $3.4bn charge for the three months to end of September against its US consumer finance business, $1.4bn more than would have been expected if first half trends had continued. Of that $1.4bn, half related to non-mortgage loans.

Green, chairman, said that problems with bad debts were spreading from the mortgage business to other loans, such as credit cards and for car purchases, as consumers found it harder to get credit and delinquency rose. He said that while delinquency rates were up, they were still lower than the level seen in previous downturns.

At the end of the third quarter, $1.6bn or 3.2 per cent of the bank’s US branch based mortgage book were two or more payments in arrears, up from $1.1bn at the end of June. Worse, $3.2bn or 8.2 per cent, of its Mortgage Services portfolio were that far in arrears, up from $2.6bn at the end of the second quarter.

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