HSBC £3bn credit crunch losses

May 12 2008 By Sion Barry

BANKING giant HSBC said today that a "resilient" performance had helped lift first-quarter profits despite an extra £3bn in credit crunch losses.

The bank took the losses on bad debts from its US consumer finance business and write-downs on mortgage-backed investments hit by the financial turmoil.

HSBC said it had increased pre-tax profits in all major emerging markets such as Asia and the Middle East – but added that the outlook for 2008 was "unusually difficult" to predict and said a US recession was "increasingly likely".

Moreover, nationalised mortgage lender Northern Rock reported an increase in arrears today, but said it was making "solid progress" with its business plan.

Northern’s executive chairman, Ron Sandler, said economic conditions combined with a shrinking loan book meant mortgages three months in arrears rose to 0.95% at the end of April, compared with 0.57% at the end of December.

However, he added that the overall credit quality of the loan book remained satisfactory and at a level assumed in the bank’s