As predicted by our analysts here at Household - HSBC Watch, HSBC’s predatory profit is down. But first, read this article from Saturday, October 1st 2005 in which HSBC said less than one percent of accounts were effected by hurricane Katrina. Now read the newest news release below. Who is lying? What’s wrong here? Or could it simply be that Household International is catching up with HSBC?
Here you go:
LONDON (AFX) - November 14, 2005, 09:48 AM: HSBC Finance Corporation, the US consumer lending arm of UK banking giant HSBC Holdings PLC, unveiled lower third-quarter profits, blaming higher bad debt charges as a result of Hurricane Katrina.
HSBC Finance said net income for the three months to Sept 30 came in at 281 mln usd, down 14 pct on the same period last year.
The decline partly reflected 180 mln usd in provisions against loans that might not be repaid because the borrowers have been displaced by Hurricane Katrina. HSBC Finance said the final level of provisions might change, as the full financial impact of the storm has not yet been assessed.
The bank said it had outstanding loans of 1.4 bln usd in the Gulf Coast region affected by Katrina, of which about 1 bln usd is secured against borrowers’ homes.
HSBC Finance, created from US lender Household International, which HSBC acquired in 2003 for 9 bln stg, said it had also taken a 100 mln usd charge to cover a higher-than-expected increase in individual bankruptcies ahead of a forthcoming change to US bankruptcy law.
Reuters reported: LONDON (Reuters) - Global bank HSBC’s consumer finance arm said profits in the third quarter fell 40 percent from the previous quarter, hit by provisions related to Hurricane Katrina and new U.S. bankruptcy laws. Higher bad debts also took their toll, and the bank said an increase in the number of bankruptcies filed in the United States before new regulations introduced on October 17 had been greater than expected. As a result, it made an additional $100 million provision for the impact in the third quarter and set aside another $200 million in the fourth quarter to cover loans it does not expect to be paid back, mainly from its U.S. MasterCard and Visa credit card portfolio.
HSBC Watch analysts said the MasterCard and Visa accounts would not be paid back because many of them involve identity theft and fraud, and accounts do not belong to, nor were they opened by the account holders on record at HSBC Finance. “They have this so messed up we receive 5 to 10 complaints a day from people discovering fraudulent items on their credit reports” said the group.
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