HSBC To Write Down $16 Bln For FY07 - BBC Reports [HBC]

3/2/2008 2:20:03 PM HSBC Holdings Plc (HBC, HSBA.L) is expected to report about $16 billion or £8.1 billion of losses for 2007, mainly due to the deteriorating US housing market, according to the British Broadcasting Corp. or BBC. However, it is still thought profits will rise to $25 billion from $22 billion last year and it will raise its dividend.

These writedowns, which reportedly amount to $16 billion, is greater than the $10.6 billion impairment provision for 2006.

HSBC became the focus of shareholder discontent when the bank had to set aside £1.75 billion or $3.5 billion for losses on subprime mortgages in the U.S. There were also calls for the bank to sell businesses in developing countries and expand in faster-growing emerging markets.

The writedowns may increase the pressure on the bank's management from activist shareholders to overhaul its policy with regard to its troubled US arm HSBC Finance Corp. or HFC. The investment group wants HSBC to focus on growing markets in Asia.

Shareholder activist Knight Vinke is pressuring HSBC's chairman Stephen Green to severe ties with HFC and thus ditch all its exposure to struggling US housebuyers, according to reports in The Sunday Times and The Sunday Telegraph.

In the last two years the write-offs that have stemmed from HFC - the American banking business of HSBC, have come in above $14 billion.

Some analysts said HSBC had started to address most of the issues. Last week, HSBC sold its seven French regional banking subsidiaries for US$3.17 billion.

BBC reported that HSBC is expected to reassure investors that its future is brighter by lifting its dividend payout to shareholders by 10% in line with its UK peers.

European banks and brokers have racked up losses of $79 billion, compared with $86 billion for U.S.-based institutions. The charges are mainly from the crumbling U.S. subprime- mortgage market. HSBC is the last of the big five British banks to report its earnings for 2007. Barclays, Royal Bank of Scotland, Lloyds TSB and HBOS have already reported their results.

Barclays Plc (BCS, BARC.L) reported a lower profit in its fiscal year 2007, reflecting 91% fall in profit on disposals, and losses due to US sub-prime credit market turmoil. Barclays' results included GBP 1.6 billion of net losses affected by sub-prime mortgage related write-downs.

For the year, Britain's third-largest banking group posted profit of GBP 5.10 billion, lower than profit of GBP 5.20 billion a year earlier. Profit attributable to equity holders was GBP 4.42 billion, down 3% from GBP 4.57 billion last year. Earnings per share for the period dropped 4% to 66.7 pence from 69.8 pence a year ago.

Royal Bank of Scotland Group Plc (RBS, RBS-PL, RBS.L, RBSPF.PK) reported higher profit for full-year 2007, helped by the acquisition of ABN AMRO and strong performance in its UK operations. The Edinburgh, Scotland-based company reported profit of GBP 7.71 billion, up 19% from GBP 6.45 billion last year. Excluding ABN AMRO, the profit rose 22% to GBP 7.94 billion during the year.

The company's profit attributable to ordinary shareholders increased to GBP 7.30 billion, or 75.7 pence per share from GBP 6.20 billion, or 64.4 pence per share, in the prior year. Excluding ABN AMRO acquisition, profit came in at GBP 7.55 billion. Adjusted earnings per share, excluding purchased intangibles amortisation and integration costs, grew 18% to 78.7 pence from 66.7 pence a year ago. Excluding ABN AMRO, adjusted earnings per share rose 22% to 81.7 pence per share.

Lloyds TSB Group Plc (LLOY.L, LYG) on Friday reported a 14% rise in fiscal year 2007 profit, helped by lower tax charge. For the year, the company posted profit of GBP 3.32 billion, 14% higher than profit of GBP 2.91 billion a year ago. Profit attributable to equity shareholders increased 17% to GBP 3.29 billion or 57.9 pence per share from GBP 2.80 billion or 49.5 pence per share in the prior year.

HBOS Plc (HBOS.L, HBOOF.PK), reported higher profit in fiscal 2007, despite a GBP 227 million negative fair value adjustments on traded investment securities. The Edinburgh, Scotland-based company reported fiscal 2007 profit of GBP 4.11 billion, higher than GBP 3.94 billion last year. In 2007, profit after tax rose to GBP 4.10 billion from GBP 3.93 billion in the previous year.

Charlotte, North Carolina-based Bank of America Corp.'s (BAC) latest fourth quarter profit plunged 95% to $268 million on a write-off of $5.3 billion. The bank's trading account losses for the quarter was $5.44 billion.

Similarly, Wachovia also took a write-down of $1.7 billion and $1.5 billion in provision expenses, to cover bad loans for its latest fourth quarter The bank's fourth quarter profit was down to $51 million, representing a decline of 98% from a year earlier.

In late-January, UBS, the largest Swiss bank, said it would write off $14 billion due to subprime crisis.

HBC closed Friday's regular trading session at $75.25, down $2.19 or 2.83%. In the after-hours, the shares gained 14 cents. HSBA.L ended Friday's regular trading session at 766.00 pence, down 14.00 pence or 1.79%.