HSBC Sees Dive In Profits, Jump In Negative-Equity Loans

More than one in 10 mortgages are in negative equity or close to being plunged into it, one of the world's biggest banks admitted today.

HSBC said it has seen a shocking 40 per cent jump in the size of loans which are larger than the value of the property.

In the UK, it had £460million of 'negative equity mortgages' in the six months to the end of June, compared to just £330million at the end of December.

But there is also a further £5.2billion of loans where the loan-to-value is 90 per cent or more.

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Read more about HSBC's earnings report

Comments

[dukeitout]

Don't be down on HSBC. They are making a profit to the tune of $7.7 billion. They are not members of the big bank club that expreses it's success in terms of who has the lowest loss (in billions). They did not fall into the trap of other big banks who knowingly made loans that they suspected would not be repaid. HSBC carries most of their loans on their books. Citicorp, B of A, Countrywide, et al., could take a lesson.

[darthdarcy]

I noticed there are new ads on TV for HSBC all of a sudden...

The same goes for UBS lots of TV ads, who created this disaster with the help of Phil Gramm....J­ohn McCain's economic Guru..!

[Sundialsvc4]

First step: send corporate officers to prison. Yeah, real prison. Orange-jump-suit prison. The charge? Fraud.

Second step: reappraise those properties and re-price those loans. If you're in hock for, let's say, $350K for a property that's worth $200K, whatcha gonna do? Yep, you'll walk. And $350K in value just vanished. So what we do is this: you now owe $180K and you agree to keep the loan for at least two years, with the promise that if prices continue to fall we'll reprice the loan again.

What's in it for you? You just got given $20K in real equity, which you can collect in just two years. You're no longer underwater. We've writen off $150K but we didn't have to write off $350K. The promise of getting some amount of debt-service is much better than none.

[slr249]

I'm have accounts with HSBC, primarily because it's an international bank and I really enjoy not paying ATM fees when I travel to Europe. While I've definitely had problems with HSBC before (their divisions don't talk to each other), I'm not too concerned with my money at HSBC. They are an international entity and are booming in other parts of the world. Plus they have one of the highest interest rates on their savings account.

[joebaggadonuts]

So you expect that China will bail them out if the US won't, eh?

[zizyphus]

The banks with the highest interest on their savings accounts are the the ones in the most trouble, I heard.

[MetalCanuck]

This will be a depression folks, they can't raise interest rates but if they don't the dollar will become worthless. It may still happen if they keep bailing people out. There is another HUGE wave of mortgages to go under over the next 3 to 4 years.

[fictioneer]

I'm glad I closed my checking account there.

[Podewumun]

Got an HSBC credit card? If so, pay it off and cut it up. Same with the rest of them.
It's time to "break the bank".

[leftLibertarian]

don't worry, the government will bail you out

[aztecdiva]

Huffington Post didn't post all of the information. HSBC globally made over $10 billion due to diversifying financial priorities. The North American division actually made a profit in part due to its Credit Card Division. HSBC became the world's largest bank over taking Citibank and without Dubai bailout. The one thing that HSBC didn't do is sell subprime financial securities which brought down the financial markets but also they saw reorganized in time to minimize the the fallout of the mortgage crisis.

[Scarllatti]

Thanks for the information.

[joebaggadonuts]

Thanks Diva.

[xtown]

What in the hell have these banks been up to? Is there no risk oversight anywhere?
Days of reckoning had to happen sometime I suppose.

[marijam]

I hope somebody is keeping track of the market mavens who have been WRONG, vs those that have been RIGHT?

[jsarets]

I'm pretty sure the MSM is keeping track so that, in the future, the ones who were the most wrong can be allocated the most airtime as pundits. They do this with foreign policy analysts all the time.

[Scarllatti]

Well said. You mean 'pundits' like that screaming TV madman Jim Crammer?

[outnow]

The "real economy" will come back. Interesting comment. We now have a "real economy" versus a fantasy economy based on complex financial junks bonds. When the stream of income is less than 90% all of the economic models for derivatives are upside down. Just wait until the effects ripple through the real economy and reinforce each other.

[Cynth]

According to Gramm, it's just psychologi­cal....

[outnow]

He's confusing the term "recession" with "depressio­n." A "depression" can be a psychological diagnosis or an economic state induced by Phil Gramm on behalf of the world's financial elite with petroleum and food prices being used as weapons in class warfare.

[Scarllatti]

And that is what worries me the most---when some goofy out-of-touch tax-payers sustained old man tell me that my real economic woes are PSYCHOLOGICAL.

Does Graham shop at Kroger or Walmart?

[marijam]

It's just on paper, right? They'll still have their million dollar paychecks and, should they get laid off, their severance pay.

[larry278]

Didn't Jim Cramer say that the market had hit its bottom last week? We may see high fliers from the City & Wall St jumping from windows by the bunch. I hope that they don't fall on the braver sort who will be selling apples or shining shoes. There will be light coming from the tunnel, if the tunnel doesn't collapse 1st.

[Scarllatti]

I always feel like kicking in my flat screen TV whenever this Mad man starts screaming with his Voodoo economic predictions. I usually save the situation with my remote control (the greatest innovation added to TV viewing). Please someone tell me, what economic or financial degrees or expertise does this bozo have?

[fictioneer]

Who knows, but stop watching. He doesn't know much. Wherever he learned it.