HSBC Holdings PLC, Europe’s biggest bank, reported another big hit from exposure to the U.S. mortgage crisis Wednesday and warned that bad debts could increase if the U.S. housing market weakens further.
However, the bank’s shares rose 3 percent as it reassured investors that third-quarter profits for its global business were ahead of last year, despite the $3.4 billion (2.3 billion euros) impairment charge at its U.S. consumer finance division, HSBC Finance Corp.
The charge was higher than anticipated by analysts and significantly above the $1.9 billion and $2.2 billion booked in the first and second quarter respectively. The division also added $3.4 billion to its credit loss reserves.
HSBC said it would close or consolidate up to 260 more HSBC Finance Corp. branches, adding to 100 branches it had announced previously and taking the number of remaining branches to around 1,000.
HSBC Finance Corp. is also known as Household Finance.