HSBC to increase loan provisions

8 February 2007

HSBC Holdings will increase its loan provisions by 20 per cent above analysts' estimates due to concerns over the state of its US mortgage-lending business.

According to the UK-based bank, the slowing of the US's property market has had a negative impact on business, with loan losses occurring at a faster rate than was previously anticipated.

The bank currently runs mortgage-lender Household International in the US.

"It is clear that the level of loan impairment provisions to be accounted for as at the end of 2006 in respect of mortgage services operations will be higher than is reflected in current market estimates," HSBC said in a statement.

The bank added, however, that its current performance in mortgages was not indicative of its performance overall.

"Generally, apart from the mortgage services operations, the performance of the HSBC Group's businesses for 2006 was in line with our latest expectations," the statement read.

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