Monday, May 12, 2008

Details/Trends HSBC US Business

Besides the fact that they have written down billions i i think the most interesting part are the details on the US part of their business (especially on loan modifications ). Their acquisition of Household five years ago was probably one of their worst investments ever.... At least they can easily weather the storm without diluting shareholders (thanks to their Asian exposure ) . The following presentation gives a nice overview of Details HSBC US Business and is hinting there is much more pain to come......

Abgesehen von den erneueten Mrdabschreibungen an die man sich inzwischen gewöhnt hat ist es hilfreich einen Blick auf die Details des problembeladenen US Geschäfts von HSBC zu werfen ( besonder interesaant das Tempo der Kreditmodifikation ).... Kein schöner Anblick...... Der Kauf von Household in den USA vor 5 Jahren war rückblickend wohl der schlechteste Kauf in der ruhmreichen Geschichte von HSBC. Nichtsdestotrotz wird HSBC auch dank der starken asiatischen Wurzeln diesen Sturm wohl ohne eine größere Verwässerung der Aktionäre überbrücken können. Die nachfolgende Präsentation gibt einen schönen Überblick über das Details HSBC US Business und verdeutlicht das hier sicher noch mehr an Abschreibungen kommen wird.....

HSBC Statement
Our pre-tax profits in North America declined significantly against the same period last year, adversely affected by higher loan impairment charges in the US consumer finance business and further write-downs in Global Banking and Markets. These losses were partly offset by gains reported on HSBC's own debt held at fair value.

Loan impairment charges in the US consumer finance business were US$3.2 billion, significantly higher than the US$1.6 billion recorded in the first quarter of 2007 but notably less than the US$4.6 billion recorded in the fourth quarter of 2007, in part reflecting seasonal trends.

It seems likely that the deterioration in the US housing market will extend into 2009; it is also clear that US economic growth has slowed and there is an increased likelihood of a recession this year. Against this economic backdrop, we continued to experience higher delinquencies across our major lending portfolios, though these were broadly in line with our expectations at the end of 2007.

The vast majority of our mortgage customers continue to meet their commitments. At 31 March 2008, 5.0 per cent of mortgages in our US branch-based consumer lending business were two months or more overdue, compared with 4.2 per cent at 31 December 2007. The equivalent figures for our mortgage services business were 12.5 per cent and 11.2 per cent, respectively. This trend of rising delinquency ratios will continue as balances continue to be run off.

Reported delinquency percentages in our credit and private label card products were also affected by the weakening US economy, as well as by a shift in product mix, portfolio seasoning and lower origination balances. The latter was the result of action taken to curtail lending growth. At the end of the quarter, the two months or more delinquency rate for credit cards was 5.9 per cent and 3.6 per cent for private label cards, compared with 5.8 per cent and 3.4 per cent, respectively, at the end of 2007.

We have continued to take positive action to mitigate, where appropriate, the effects of the housing market decline on our customers. In the first quarter of 2008, we modified about 1,500 loans with an aggregate balance of approximately US$270 million ahead of their adjustable-rate mortgage ('ARM') resets; this brings the total number of loans modified to around 11,900 and the aggregate balance to some US$1.9 billion.

> At the end of 2007 they had $35.4 billion in residential mortgages outstanding.

> Ende 2007 hatte HSBC 35,4 Mrd $ an Hypotheken in den Büchern.

As market conditions pointed to an extended housing market decline, we began to offer, selectively, some longer term modifications, generally providing assistance for either two or five years.

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