HSBC Announces Bad Debt Exposure

UK based bank HSBC has today followed analysts expectations by announcing the extent of its bad debts for the third quarter in line with previous predictions, despite its refusal to comment on the situation earlier in the week.

The bank today announced that its sub-prime linked bad debt exposure for the period would total $3.4 billion, despite the fact that it will continue to enjoy overall profitability growth from strong continuing revenues across its international operation.

The news today reflects a substantial de-valuation in book assets, largely as a result of exposure to the fateful sub-prime mortgage lending market in the US, and indirectly linked book securities over the last quarter.

The announcement sees HSBC fall in line with many other high profile banks and investment houses which have faltered over the course of the third quarter as a direct result of exposure to the sub-prime sector, with Citigroup and Merrill Lynch both announcing heavy losses over their Q3 results.

The bank delivered the results with a further warning that it could continue to see its exposure to the sub-prime sector grow over the coming quarters, particularly in light of the ongoing problems within the US housing market which are having an overall impact on its business there.

The bad debt write down was substantially larger than it had previously forecast, reflecting the extent of the severity of the crisis in the sub-prime sector and the US economy as a whole in recent months.

Speaking today on the announcement, an HSBC spokesperson said that he was mindful to remain cautious about the results for the bank over the coming periods, particularly in the run up to the year end and in to the traditionally slow early months of the new year.

HSBC’s results today led to a significant downturn in trade of its shares, which fell heavily on the day as a result of fleeting investor confidence derived from the enlarged bad debt exposure over the third quarter.

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