HSBC profit jumps despite higher bad debt charges, shrinking mortgage

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The HongKong & Shanghai Banking Corp's New Zealand branch's mortgage book continued to shrink during the September quarter but its profitability jumped sharply, despite an equally sharp rise in charges for bad loans.

Monday, November 30th 2009, 4:06PM

by Jenny Ruth

The bank's latest general disclosure statement (GDS) showed net profit rose 19.9% to $12.3 million in the three months ended September, taking net profit for the nine months ended September to $38.4 million, up 38.3% on the same nine months a year earlier.

The September quarter profit was after an additional $2.5 million charge for bad loans, bringing the charge for the nine months to $6.8 million.

Net interest income was up only 6.9% in the September quarter and up 12.3% in the nine months ended September but operating expenses fell 8.6% in the quarter and 6.3% in the nine months.

HSBC's mortgage book shrank another $35.5 million in the quarter to $1 billion at September 30 which compared with $1.22 billion in September last year. HSBC's mortgage book has been shrinking since the June quarter of 2003 when it was $3.02 billion (under the old Basel l rules).

HSBC's mortgages with loan-to-valuation ratios above 80% amounted to just 7.5% of the total book at September 30, although that was up slightly from 7.1% at June 30.

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