HSBC stunned investors late last night with a stark warning its bad debt provisions would rise by $1.7bn as a result of US borrowers defaulting on their mortgages, says the Daily Telegraph .
The banking giant said loan impairment charges and other credit risk provisions in its 2006 accounts would rise some 20% above analysts' consensus forecasts as a result of the defaults. Consensus estimates had put such charges at $8.8bn but these will are now expected to balloon to around $10.4bn. The warning reflects the way HSBC's sub-prime mortgages business has been hit by the stagnation in the US housing market and rising interest rates, says the paper. HSBC said: "The impact of slowing house price growth is being reflected in accelerated delinquency trends across the US sub-prim...
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