Fitch: No change for HSBC Holdings

Fitch Ratings said it is concerned by the announcement by HSBC Holdings plc, which rated AA with positive outlook, expects aggregate impairment charges for the group to be about 20% higher than consensus $8.8 billion in fiscal year 2006. But, it is not at this stage of sufficient magnitude to warrant a change in the company's issuer default rating or outlook, the agency said.

The $1.8 billion increase in expected impairment charges relates directly to the $50 billion mortgage services loan book of the bank's subsidiary, HSBC Finance Corp. The increase in the provision for credit losses was largely driven by deterioration in the performance of the mortgage loan originations acquired in 2005 and 2006 by the mortgage services business unit, particularly in the second-lien and portions of the first-lien portfolios, which has resulted in higher delinquency, charge-off and loss estimates in these portfolios, Fitch said.

Fitch said that HSBC Finance is not alone in suffering increased mortgage credit deterioration. Most U.S. mortgage lenders active in subprime lending are experiencing rapidly rising delinquencies, the agency said. Fitch said it will monitor developments in the mortgage and other portfolios of HSBC Finance in the context of HSBCs overall financial and risk profile. Although business lines will inevitably be amended, Fitch said it does not expect the company to reduce its commitment to the U.S. market or to its U.S. subsidiaries.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.