Bonds News

HSBC says too soon to call peak of U.S. bad debts

LONDON (Reuters) - HSBC HSBA.L, Europe's largest bank, said on Monday it was still too soon to say whether U.S. housing bad debts had peaked in the first half of the year, despite a slower rate of deterioration.

HSBC earlier reported a U.S. impairment charge of $6.8 billion, up 85 percent on the year but down from the previous six months and broadly in line with analysts forecasts.

“On the positive side, the rate of deterioration has definitely slowed, but we have had two quarters of seasonally good factors, with tax refund season at the beginning of the year and the fiscal stimulus package in the second quarter,” HSBC Finance Director Douglas Flint told reporters.

He said the U.S. book was now exposed to the impact of rising fuel and food prices, rising unemployment and the threat of a full-blown recession.

Flint had said in March that it could take until the end of 2009 for its U.S. business to see a turnaround and he confirmed on Monday forecasts that the housing troubles would take two to three years to work through.

Speaking on a conference call after the bank posted interim results, Flint said HSBC saw its holding in China's Bank of Communications 3328.HK601328.SS as a "long term strategic investment" and could consider raising its stake.

Reporting by Steve Slater and Clara Ferreira-Marques