| CATEGORY: NEWS AND ANNOUNCEMENTS SECTOR: BANKS |
HSBC takes $3.4bn bad debt hit |
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Wed 14 Nov 2007
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LONDON (SHARECAST) - Shares in HSBC rallied as it revealed a bad debt charge of $3.4bn in the third quarter but added revenues had picked up and costs had fallen.
HSBC say the bad debt charge was $1.4bn more than implied by extending first-half trends and reflected a deterioration in the subprime housing market in recent months.
Even so, profit before tax in the third quarter of 2007 was ahead of the equivalent quarter in 2006 and the group's performance for the first nine months of 2007 was also ahead of the comparable period last year.
Underlying revenue growth in the third quarter was higher than in the first half of the year; and underlying cost growth was moderately lower, HSBC added.
In Asia-Pacific and the Middle East, the excellent operating and financial performance delivered in the first half of the year continued during the third quarter, while Europe, driven by the UK, was strongly ahead of the prior year quarter.
The bad charge included $0.7bn related to real estate secured credit with the remainder largely due to branch unsecured loan and cards portfolios. Loan impairment charges are expected to remain high with the probability of further deterioration if the current housing market distress continues and further impacts the broader economy, HSBC said.
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