First-half pretax profit at the consumer finance business rose 9 percent to $2.32 billion. “We see this market, the sub-prime market, as a market that’s going to continue to grow,” Tom Detelich, HSBC Finance group executive said. “We think we are positioned very well to deal with any challenges that lie ahead.”
Next year will be “a bit more challenging” than 2005, he said. The U.S. economy is “generally positive,” although rising interest rates and a flat yield curve are putting pressure on interest margins, Detelich added, referring to a narrowing difference between yields on short- and long-maturity debt.
Consumer banking has been increasing its contribution to profit since HSBC purchased Household International Inc. for $15 billion in 2003, adding more than 50 million customers with spotty credit records. Less than 1 percent of HSBC’s U.S. consumer finance portfolio is located in areas affected by the hurricanes, according to Bobby Mehta, chief executive for HSBC North America Holdings.
The U.S. economy will see a “significant dip” in growth the rest of the year because of the recent hurricanes and the surge in fuel costs, though inflation will probably stay under control, Federal Reserve Bank of San Francisco President Janet Yellen said Sept. 27 in London.
According to analysts at consumer watchdog organization HSBC Watch consumers, including those that have never been HSBC customers, report incorrect credit report information regarding HSBC NV, HSBC RS, or other HSBC entities directly related to Household International, now called HSBC Finance Corporation.
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