Household HSBC Watch

HSBC shares have lagged behind New York-based Citigroup Inc., the largest U.S. bank, since the $15.5 billion takeover of U.S. consumer-finance company Household International Inc. almost five years ago. An increase in loan defaults by people with spotty credit records has overshadowed HSBC’s accelerating growth in Asia and commercial lending in the first half of 2007.

In North America, first-half earnings slumped 35 percent to $2.44 billion because of loan defaults by subprime borrowers. That missed the median estimate of $2.49 billion from five analysts surveyed by Bloomberg. Consumer-banking profit in the U.S. more than halved to $1.34 billion as bad debts in North America rose 76 percent to $3.82 billion.