HSBC hit by British bad debt

BANKING giant HSBC yesterday said it had put more cash aside to cover problem debts as rising interest rates and the slower housing market took their toll on British consumers.

The worldwide group said Britain remained its most difficult credit market as more customers ran into trouble with loan repayments in the first half of its financial year.

However, HSBC’s major global presence made it less reliant on Britain and allowed the group to post a forecast-beating 5% rise in half-year pre-tax profits to $10.64 billion (€8.67bn).

Michael Geoghegan, chief executive of the British arm, said there had been an “uptick” in consumer credit deterioration but that this type of lending accounted for a smaller proportion of the business compared with its rivals.

Interest rate rises, slower employment growth and the subdued property sector contributed to the trend, which led to HSBC increasing its provision for bad debt by about a fifth on a year earlier to €3.28bn in the six months to June 30.

The group said actions such as its decision to share credit records with other lenders were starting to improve its credit outlook.

HSBC will this month become Britain’s first high street bank to provide details on its customers to credit reference agencies, in a bid to make it harder for people with poor records to take out loans.