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Profits Boom but Writedowns Soar at HSBC
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(03-03-08) - HSBC has reported a mixed year; worldwide profits showed a 10% increase, but the writedown on bad debts and other credit losses totalled $17.2 billion. writes Dan Drage dan.drage@consumerchoices.co.uk |
Exposure to vulnerable American markets cost HSBC (www.hsbc.co.uk) $11 billion last year, against a backdrop of an operating pre-tax profit of $24.2 billion, up 10% on 2006.
Operating income and earnings per share were all up healthily at HSBC, and the bank bumped up the annual dividend by more than 11 per cent to $0.9 a share.
Stephen Green, the chairman of HSBC, reported the bank’s infrastructure coming under pressure in 2007:
‘2007 was a year when large parts of the international financial system came under extraordinary strain. Our North American results continue to be adversely affected by high loan impairment charges as we respond to the impact on our portfolio of credit deterioration arising largely from housing market weakness in the US’
He continues:
‘The management team has taken vigorous action to address and mitigate the problem.’
Chris Eagle, Commercial Manager at CreditChoices, can see the US sub prime credit crisis tightening its grip in 2008:
‘If you were wondering how the US sub prime credit crisis is affecting you, then here’s a direct example. The writedowns that HSBC has incurred in 2007 will have direct consequences on their customers in 2008, as HSBC try to squeeze lost profits from elsewhere in the banking system.’
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