Financial Times FT.com

Sub-prime woes weigh on HSBC arm

By Toby Shelley

Published: May 15 2007 08:39 | Last updated: May 15 2007 08:39

HSBC Finance Corporation’s quarterly net earnings dropped 39 per cent to $541m as the lender almost doubled its provision for credit losses, in a further sign of the deterioration of the sub-prime lending market in the US.

The unit, created by HSBC’s acquisition of US lender Household in 2003, held out little hope of near term improvement, saying: “we expect the probability of default for adjustable rate first mortgages subject to repricing as well as any second lien mortgage loans that are subordinate to an adjustable rate first lien will be greater than what we have historically experienced”.

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