UBS cut its pre-tax profit forecast for HSBC Finance, an HSBC unit previously known as Household International, by 1.2 billion US dollars, saying the unit’s third quarter 2007 results are “set to look bad”.
“Third quarter 2007 is set to look bad for Household, and we do not expect the group to make any effort at providing reassurance as to the near-term outlook. This is true both for the correspondent mortgage portfolio but also, more significantly, for Household’s other, currently performing books,” Ryan said.
HSBC has been criticised for entering the US mortgage market three years ago through the acquisition of Household International. HSBC issued its first ever profit warning early this year following an unexpected surge in bad debts at its US mortgage business.