Higher bad loan provisions
Investment banking profit posted higher bad loan provisions in its U.S. unit and in the third quarter fell amid Europe’s sovereign debt crisis, Europe’s largest bank by market value HSBC Holdings Plc said. Today, HSBC said in a statement pretax profit at its investment bank led by Samir Assaf fell to about $1 billion or 53 percent in the third quarter from a year-earlier.
London-based HSBC said Bad loan provisions increased from $3.15 billion to $3.89 billion, a rise attributed to its U.S. unit. Following its purchase of U.S. subprime lender Household International in 2003, HSBC has set aside than $65 billion for souring loans in North America. Today, Finance Director Iain Mackay told journalists this quarter’s increase in loan impairment charges foreclosure moratoriums in some U.S. states. HSBC like Royal Bank of Scotland Group Plc and Barclays Plc recorded a slowdown in revenue from investment banking amid volatile markets.
HSBC traded at 509.9 pence and fell as much as 6 percent to 505.4 pence at 10:15 a.m. in London. It is the sixth-worst performer in Financial Services index and the Bloomberg Europe Banks. Chief Executive Officer Stuart Gulliver said in the statement, the banking industry faces “significant headwinds” because of macroeconomic uncertainty, continuing political and regulatory, especially in Europe.