HSBC 2009 Annual Report Download - page 225

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rates increased from 8.7 per cent at 31 December
2008 to 11.1 per cent at 31 December 2009.
Affordability mortgages are those in which the
customer’s monthly payments are set at a low initial
rate, either fixed or variable, before resetting to a
higher rate once the initial introductory period is
over. At 31 December 2009, HSBC Finance had
US$10 billion of affordability mortgages, compared
with US$14 billion at 31 December 2008, as the
portfolio continued to run off. Excluding the effects
of revising the write-off period, in dollar terms,
delinquencies in this portfolio declined during 2009
but, as balances declined at a faster rate, delinquency
rates increased. At HSBC Bank USA, affordability
mortgage balances of US$11 billion at 31 December
2009 compared with US$15 billion at 31 December
2008.
Credit cards
In the US credit card portfolio, two months or
more delinquent balances declined from
US$2.0 billion to US$1.8 billion, while in
percentage terms they rose from 6.8 per cent at
31 December 2008 to 7.4 per cent at 31 December
2009 as loan balances declined at a faster pace than
delinquencies. In the private label cards portfolio,
two months and over delinquent balances declined
from US$0.7 billion to US$0.6 billion while
contractual delinquency increased from 4 per cent
at 31 December 2008 to 4.1 per cent at 31 December
2009. The decline of balances in both portfolios was
a result of actions taken to tighten underwriting
criteria in order to reduce the risk profile of the
portfolio, lower customer spending and, in the
private label business, terminate certain unprofitable
partner relationships. The decrease in delinquency
balances in both portfolios also reflected higher
levels of personal bankruptcy filings.
Motor vehicle finance
In the vehicle finance portfolio, two months or
more delinquencies declined from 5.0 per cent at
31 December 2008 to 4.6 per cent at 31 December
2009, despite the reduction in loan balances, as
delinquencies fell at a faster pace.
Other personal lending
In dollar terms, delinquencies in the Consumer
Lending unsecured portfolio remained lower, despite
the weakened economic conditions, due to a higher
number of personal bankruptcy filings which
resulted in accounts moving to write-off more
quickly, portfolio seasoning as the portfolio ran
off, and the actions taken previously to tighten
underwriting criteria in order to reduce the risk
profile of the portfolio.
US personal lending – loan delinquency
The table below sets out the trends in two months
and over contractual delinquencies in the US:
Two months and over contractual delinquency
(Unaudited)
Quarter ended
As
reported
31 Dec
2009
Ex. period
change
31 Dec
2009
30 Sep
2009
30 Jun
2009
31 Mar
2009
31 Dec
2008
30 Sep
2008
30 Jun
2008
31 Mar
2008
US$m US$m US$m US$m US$m US$m US$m US$m US$m
In Personal Financial
Services in the US
Residential mortgages 9,551 11,519 10,834 10,070 9,892 9,236 7,061 5,984 5,757
Second lien mortgage
lending ................... 1,194 1,628 1,631 1,676 1,772 1,790 1,616 1,585 1,638
Vehicle finance .......... 267 267 295 310 269 541 512 445 370
Credit card ................. 1,798 1,798 1,834 1,864 1,992 2,029 1,871 1,700 1,782
Private label ............... 622 622 639 636 659 679 606 590 591
Personal non-credit
card ........................ 1,548 2,619 2,680 2,709 2,855 3,020 2,763 2,606 2,650
Total ........................... 14,980 18,453 17,913 17,265 17,439 17,295 14,429 12,910 12,788
%
18 %18 % 18 % 18 % 18 % 18 % 18 %18 %18
Residential mortgages 14.54 17.03 15.39 13.89 12.82 11.42 8.23 6.65 5.96
Second lien mortgage
lending ................... 10.14 13.35 12.71 12.35 12.59 12.26 10.59 9.83 9.76
Vehicle finance .......... 4.63 4.63 4.61 3.97 2.79 4.98 4.27 3.48 2.83
Credit card ................. 7.38 7.38 7.28 7.25 7.14 6.76 6.18 5.57 5.81
Private label ............... 4.12 4.12 4.38 4.08 4.28 3.99 3.72 3.65 3.66
Personal non-credit
card ........................ 12.55 19.77 18.73 18.02 18.30 17.83 15.41 14.00 13.71
Total ........................... 11.09 13.34 12.47 11.49 10.92 10.16 8.13 7.01 6.64