HSBC’s US Mortgage Business may increase losses

HSBC chief executive officer, Michael Geoghegan, said at an informal shareholders meeting that the bank may see further losses in its US mortgage loan business.

Although there is an expectation that the mortgage business will recover, although no specific time frame was given.

In the first quarter of 2008, the sub-prime provisions were slowing, although it seems that this will not be taken as a sign of increased fortunes, and will not be reducing provisions just yet, even though they have posted $19.5 billion in write-downs and losses since the beginning of last year.

The CEO said more than 80 percent of its customer base are in property in the US and are still repaying loans secured on their properties and that they can’t be classified as bad or doubtful debts as they expect most, if not all, to eventually bounce back.

HSBC has 400 branches in the US but the bank cut 2,000 jobs in the first quarter as a result of the losses from the US. The consensus is that the group is concerned the US economy may slip into recession.

Also up for discussion is executive pay which has been discussed with shareholders, and although Geoghegan has said that the vast majority understand that they need the talent to run the bank, shareholders will vote on the issue on May 30th.

Although Pensions Investment Research Consultants Ltd said that shareholders should vote against the increase because the pay is already adequate and in line with other major banks.

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