HSBC USA reports profit for quarter
HSBC USA’s third-quarter profits improved to $161 million as revenues from credit card fees and trading combined with lower interest expenses to offset a jump in credit losses.
The profits were a significant improvement from the $136 million in losses reported a year ago by HSBC, which holds the most deposits in the Buffalo Niagara region.
The bank’s net interest income, which is the difference between the interest HSBC pays out on deposits and earns on its loans, fell by more than half to $254 million from $511 million after the provisions for credit losses.
Those credit losses swelled to $1 billion during the third quarter as HSBC was hit by continued weakness in its mortgage loan portfolio resulting from worsening conditions in the housing market. Weakness in its commercial loan portfolio, along with higher delinquencies and charge-offs within its credit card business, also had an impact on credit losses.
At the same time, HSBC executives said they were encouraged by the stabilization of its U. S. credit portfolios following the company’s decision earlier this year to freeze lending at its money-losing U. S. consumer finance business, formerly Household International, and reduce its loan portfolio.
Loan impairment charges at its consumer finance business fell for the first time since the beginning of 2006. Quarterly U. S. loan impairment charges were the lowest in more than a year, Brendan McDonagh, chief executive officer of HSBC North America, said during a conference call.
HSBC also is getting a boost from low interest rates, which slashed its interest expenses on deposits by more than half.
At the same time, the bank’s other revenues more than tripled to $895 million from $270 million, driven by a more than 50 percent jump in credit card fees and $353 million in trading profits.
The improvement at HSBC’s U. S. operations bolstered the third-quarter results at its parent company, HSBC Holdings, whose pretax profit was “significantly higher” than a year ago, as provisions at the U. S. consumer finance division dropped by 43 percent to $2.2 billion.
HSBC Finance also said Tuesday it has sold its auto finance unit and $1 billion of loans to Banco Santander SA for $904 million in cash.
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