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Profits down and bad debts rise at HSBC - 03/08/2009

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HSBC has revealed its pre-tax profits have plummeted more than 50 per cent to $5bn (£2.98bn) for the first six months of 2009.

 

An interim statement from the group also reveals that the increasing level of bad debts on its balance sheets in Europe, the USA and Asia has driven up loan impairment charges and credit risk provisions to $13.9bn (£8.26bn). This is a rise of $2.8bn (£1.66bn) on the first half of 2008. HSBC said that compared with the first half of 2008, deterioration in credit quality was experienced across all customer groups and regions as the global economy weakened.

 

The UK unit of the business contributed pre-tax profits of $1.66bn (£985m), but this was down from $3.48bn (£2.06bn) as at June last year. HSBC now has more than 351,000 customer accounts in the UK.

 

In the group’s commercial banking unit in the UK, loan impairment charges grew as continued weakness in the economy led to higher impairment charges, particularly against exposures to the real estate and construction sectors. Pre-tax profit in commercial banking in Europe dropped from $1.9bn to $852m.

 

HSBC’s statement said: "Within the UK, the core residential mortgage portfolio continued to experience low impairment, in large part reflecting HSBC’s continued focus on in-house origination and control. Stresses were more evident in the cards and other unsecured portfolios, and the secured portfolio of the consumer finance business, as unemployment rose and the ability to refinance existing debt reduced.

 

"In UK Commercial Banking, loan impairment charges rose from a low base of $173m to $504m, reflecting the general economic downturn with problems most evident in the property and retail distribution sectors."

 

Impairment charges on loans across the group, which were packaged into assets available for sale, increased from $67m as at June last year to a massive $591m at June this year.

 

Stephen Green (pictured), group chairman of HSBC, said: "The timing, shape and scale of any recovery in the wider economy remains highly uncertain. Our view continues to be cautious as long as a number of serious impediments to growth remain. Despite the macroeconomic uncertainty, we are confident in HSBC’s continued ability to deliver results. Sustainable banking is our priority."

 

The news outlets decided to keep this story quiet & focus on the Barclays news then :rolleyes:

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