HSBC Holdings Plc, Europe's biggest bank by market value, set aside $3.2 billion in the first quarter to cover bad loans in the U.S. and said profit in 2008 is ahead of the same period a year ago.
"The outlook for the rest of the year remains unusually difficult to foresee in the current environment," Chairman Stephen Green said today in a Regulatory News Service statement.
HSBC, which makes about two thirds of its profit in emerging markets, said in March that the U.S. economy and credit outlook may deteriorate before it improves. The London-based bank set aside about $12 billion for U.S. loan losses last year and an additional $5.2 billion for the rest of the world. Net income rose 21 percent in 2007 to $19.1 billion, helped by loan growth in Asia and Latin America.
HSBC rose
1.1 percent to 876 pence in London trading before today's statement, valuing the bank at almost 115 billion pounds ($224 billion). The stock has gained 3.9 percent this year, the best-performance in the eight-member FTSE 350 Banks Index, which declined 8.7 percent.
Financial companies worldwide have posted losses of $323 billion related to the collapse of the U.S. subprime mortgage market.
RBS Writedowns
Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank, wrote down 5.9 billion pounds of credit-related assets this year, including collateralized debt obligations tied to the U.S. subprime housing market and leveraged buyout loans. It is raising 12 billion pounds in a rights offer and selling about 4 billion pounds of assets to shore up capital eroded by credit writedowns and the acquisition of ABN Amro Holding NV assets.
HSBC, which
gets less than 30 percent of its funding from wholesale markets, has said it will increase mortgage lending this year as banks including Edinburgh-based HBOS Plc trim lending amid the shortage of funds.
The 142-year-old bank paid $15.5 billion for Household International Inc. in 2003, becoming one of the largest U.S. subprime lenders. Bad debts at its U.S. former Household unit may rise to about $15 billion this year, analysts at UBS AG said this month.
HSBC Chief Executive Officer Michael Geoghegan replaced American managers, closed mortgage units and stopped trading and selling mortgage-backed securities in the U.S. in response to the subprime problem.
The bank, which took $10.6 billion in loan losses worldwide in 2006, is under pressure from investor Knight Vinke Asset Management LLC to have an independent review of its strategy and spin off its U.S. operation. The New York-based company has also criticized the bank's plans for a management-incentive program.
Source:-http://www.bloomberg.com/apps/news?pid=20601087&sid=ailoYuzr_61w&refer=home |
