Perhaps John Bond underestimated the American public's disgust for predatory lending. Consumer advocacy organization Household - HSBC Watch predicted that revenue at HSBC America Holdings would drop if former predatory lender Household International was forced to stop predatory lending, ERISA fraud, late application of credit card payments, sale of questionable asset backed securities, and questionable credit approval processes. Here is the Reuters article, presented with pleasure:
Wed 17 November, 2004
LONDON, Nov 17 (Reuters) - HSBC Holdings Plc said tepid revenue growth posed a challenge at its U.S. Household business after disappointing results from the consumer finance unit, the global UK bank said on Wednesday.
Household's net income fell 32 percent to $322 million in the third-quarter from a year earlier under U.S. accounting rules, the world's second-biggest bank by market value said on Monday.
Net interest income barely grew to $2.04 billion from $2.01 billion as profit margins were squeezed.
"The revenue trends are modestly growing or flat. It's something we are addressing in our plans and that's the challenge," HSBC Finance Director Douglas Flint said in a conference call with analysts.
The bank will review Household's products and costs to try to stem margin decline, Flint said.
HSBC's shares fell on Tuesday because investors were disappointed with the performance of Household, which had grown strongly in previous quarters. The bank's stock fell 0.8 percent to 919 pence on Wednesday.
HSBC bought Household in March last year for $14.8 billion in the UK bank's biggest acquisition. HSBC wants to expand the business and cross-sell products between Household and its U.S. retail bank.
HSBC has been changing Household's lending to focus on less-risky, lower-margin business. Profitability was also squeezed by higher funding costs as U.S. interest rates rise.
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