Hsbc Share Discussion Threads

[crontab] 08/2/2007 08:06

Global bank HSBC burnt by slowing US housing market; Percentage of HSBC mortgages more than 60 days past due is climbing
By Finfacts Team
Feb 8, 2007, 06:59


UK headquartered global Bank HSBC on Wednesday evening issued a US trading update in which it said that the impact of slowing house price growth is being reflected in accelerated delinquency trends across the US sub-prime mortgage market, particularly in the more recent loans, as the absence of equity appreciation is reducing refinancing options.

Slower prepayment speeds are also highlighting the likely impact on delinquency of higher contractual payment obligations as adjustable rate mortgages reset over the next few years from their original lower rates.


"We have reviewed critically the impact of these factors in determining the appropriate level of provisioning at 31 December 2006 against the Mortgage Services loan book. We have taken account of the most recent trends in delinquency and loss severity and projected the probable effects of re-setting interest rates on adjustable rate mortgages, in particular in respect of second lien mortgages. It is clear that the level of loan impairment provisions to be accounted for as at the end of 2006 in respect of Mortgage Services operations will be higher than is reflected in current market estimates," HSBC said in a statement.

"We now expect that the impact of increased provisioning in this area will be the major factor in bringing the aggregate of loan impairment charges and other credit risk provisions to be reflected in the accounts of the Group for the year ended 31 December 2006 above consensus estimates by some 20 per cent. This is subject to final review and subject to external audit,"


The consensus estimate is based on the average for loan impairment charges and other credit risk provisions of US$8.8 billion from the most recent reports of 11 analysts.

The world's third-largest bank by market value has in effect set aside $1.76 billion, higher than analysts' consensus estimates.

Risky Subprime Market

So-called subprime customers are ones with risky credit records and at the height of the US housing boom in 2005 and 2006, HSBC bought billions of dollars of subprime loans from other lenders, lured by their higher interest rates.

The Wall Street Journal says that HSBC is one of the biggest subprime lenders in the US and is one of several lenders to stumble in its dealings with low-end borrowers. Subprime mortgage lending surged over the past several years, and these days, subprime mortgages comprise about 12% of the roughly $8.4 trillion U.S. mortgage market, up from 7.5% of the market in late 2001, according to First American LoanPerformance, a San Francisco research firm.

According to the Journal, when interest rates ticked up and the market cooled, HSBC reached a disconcerting conclusion: Its systems for screening subprime borrowers and for assessing the default risk they posed were flawed.

Many of those loans have soured, sometimes quickly. The percentage of HSBC mortgages more than 60 days past due is climbing. Fraud by borrowers has been higher than expected. "We made some decisions that could have been better," says Tom Detelich, the HSBC executive in the U.S. spearheading an effort to clean up the mortgage portfolio.


HSBC, formerly known as the Hong Kong and Shanghai Bank, like Standard Chartered, date back to the 19th century in the former British colony of Hong Kong. HSBC now operates in 76 countries and territories.

On March 28, 2003, US subprime lender Household International, Inc. was acquired by HSBC Holdings, plc. In December 2004, Household International, Inc. merged with its subsidiary Household Finance Corporation and changed its name to HSBC Finance Corporation. HSBC Finance funds its operations through several sources, including the issuance of debt and asset backed securities.

The Journal says that Household, had been criticized for allegedly predatory lending practices and, shortly before the HSBC deal, had reached a $484 million settlement with state regulators. HSBC saw Household as a way to diversify beyond Europe and Asia, and viewed subprime mortgage lending as a far less competitive business than lending to more credit-worthy customers.

After the deal was announced, Household's then-chief executive, William Aldinger, bragged that Household employed 150 Ph.D.s skilled at modeling credit risk. Household had developed a system for assessing consumer-lending risk -- called the Worldwide Household International Revolving Lending System, or Whirl -- which it used to underwrite credit-card debt and to collect from consumers in the U.S., United Kingdom, Middle East and Mexico.

[2ngh] 08/2/2007 08:04

bad news.....

[crontab] 06/2/2007 15:01

05 Mar 07 - 2006 Annual Results

A whole month to wait for this dog to start performing! Might be time to bail methinks...

[gateside] 05/2/2007 16:29

Market Caps from The Sunday Times

HSBA £108321m
BP £104003m

But they list RDSA & RDSB seperatly, when you combine them, RDS equals £110434m

So RDS are top, with HSBA second, and BP third

[miata] 05/2/2007 16:24

Yes, ADVFN probably.

[gateside] 05/2/2007 16:21

MIATA.... The figures for HSBA having the largest Market Cap, i took the Sunday Times yesterday, so clearly either The Sunday Times or ADVFN is wrong?

[crontab] 05/2/2007 12:17

BP. doesn't quite make it, though RDSA, HSBA, VOD and BARC do.

[chairman2] 05/2/2007 12:08

MIATA re risk

problem with this investment lark is that
its like driving on the rear-view mirror only.

As is well known the City - other than analysts -
operates a vehicle that has no rear-view mirror at all!

your table is typical it is totally
skewed by the relative performance share wise of BARC
(the surprise of 2006) and HSBC a dog of a China-stock

[miata] 05/2/2007 11:56

Riskgrades:

HSBA 53
LLOY 61
HBOS 72
RBS 75
STAN 78
BARC 85

Higher = more risk.

RiskGrades are calculated by comparing the current estimate of an asset's return volatility to the market-cap weighted average return volatility of a diverse set of international equity markets (the international basket) during normal market conditions.

[miata] 05/2/2007 11:30

6903 again perhaps? Read post 326 several times before parting with your cash.

[monty burns] 05/2/2007 11:29

Watching this with interest, but will be a while yet before I'm in. Still ballsing it up on BP in terms of timing, so hopefully avoiding doing that here.

Odd that so many large caps are someway off their recent highs - BP, RDSB, HSBC, GSK, AZN, yet the FTSE tickles along up near its recent peak. Plenty more to come when these ones get going again?

[miata] 05/2/2007 11:25

Well BP and HSBC are currently close in market capitalization, BP's results tomorrow will doubtless change that.

[chairman2] 05/2/2007 11:24

Monty

thanks for the quiet voice of reason

ditto for the BP thread

[monty burns] 05/2/2007 11:20

Show you how accurate ADVFN is, or how often they update:

BP number of shares in issue is (today) 19,429,808,148 excluding their holding in their own shares - at 5.42 that's £105.3 billion.

Interesting indicator of the buyback effect - on BP, so off-topic

:-)

[miata] 05/2/2007 11:14

Per ADVFN:
BP Market Cap 116.1
HSBA Market Cap 108.1

[gateside] 05/2/2007 10:58

HSBC has leap frogged both BP. and more recently RDS, and now has the largest Market cap in the FTSE100

[miata] 05/2/2007 09:23

In HK traders began reducing their positions ahead of the Chinese New Year holidays. The Hang Seng closed down 108 points. HSBC fell 0.80 hkd or 0.6%.
Tokyo's fall weighed on the HK market, stock re-weighting may also be occurring (China Life and ICBC are expected to join the HSI).


FT - rumours HSBC might be interested in taking over Prudential.
Daily Express - talk HSBC is mulling over a 900 pence a share bid approach for Prudential.
Mail on Sunday - HSBC/Prudential. Could such a merger work? There have been worse ideas, but getting all the terms right and winning backing from the City would prove a hard slog

[chairman2] 05/2/2007 09:09

financeguru

- what are your costs then for a sale and buyback
of the same shares 1% 2%??

I run two portfolios of same size: cash and shares
the interest on the cash portfolio is certain and hard to beat.
on he shares dividends are crucial in overcoming costs of trading

[miata] 05/2/2007 09:04

Good ? ! Double whammy.

[anna7979] 05/2/2007 08:17

Strong chance' of UK rates rise

There is a "strong possibility" that interest rates in the UK will rise in February, according to a report.



good for hsbc!!!!!!! and others

[financeguru] 02/2/2007 19:10

the reason for the sale is quite simply that it is a more permanent and less costly than the spreadbet or shorting the stock. no real cost involved....worst case scenario is I am wrong and don't get back in at a low level, however I feel that that is unlikely. I concede that it may be longer than a week to see the full impetus of what I feel is a substantial fall in the share price but it will come. long term view is that there will be some major upside potential but not for a while. I believe there are better pickings elsewhere at the moment. We shall see!!!!

[kenbachelor] 02/2/2007 18:47

Financeguru - And having seen them bounce off 910p twice recently, I was thinking of buying this time.