HSBC: Bad Debts Shrink, But Lending Has Plunged

The financial crisis is over for HSBC (HBC), it would seem, as a decline in bad debts helped the bank easily surpass expectations in the latest quarter.

Shares are up 4% in Europe, after the announcmenet:

“Driven by stabilised credit performance in the US, loan impairment charges have
fallen to their lowest quarterly level for over a year. The more positive signals that we
saw in the US run-off portfolio in the first half have continued, with the result that our
North American operations did not require any capital support from the Group during
the quarter. We should have further evidence by the year-end as to whether this is a
sustainable trend. All parts of the run-off portfolio continued to reduce during the

That they’re seeing this stabilisation is good news for the US economy, beyond just HSBC. The bad news, is that the company is taking the hatchet to lending, drastically curtailing the credit it’s extending to the US market.

Watch how they’re drastically shrinking lending activity >>

Overall US balance sheet shrinkage

US mortgage portfolio shrinkage

Credit card lending goes kaput

Way fewer personal or car loans

But loan impairment is falling

As are US charge-offs

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