London: HSBC Holdings, Europe’s biggest bank, said it expects to fulfil its plan to lend £15 billion ($25 billion) to UK homeowners this year, up by a fifth from 2008.
HSBC has said it will increase lending to UK homeowners this year to increase its mortgage share as rivals retreat due to pressure on their balance sheets. Its UK gross mortgage lending was £6.7 billion in the first six months of the year, with net lending of £4.2 billion.
“At the beginning of the year we said we had an appetite for £15 billion of mortgages, and in the fist half we took on about 40% of that and our anticipation is that subject to demand we would use up that 15 billion appetite,” Stephen Anderson, chief risk officer for HSBC in Europe, told analysts on Friday.
He said the bank’s “conservative and cautious principles” would remain, however, citing its own origination of mortgages and low loan-to-value average.
HSBC is easily Britain’s biggest bank by market value, but has a modest share of the domestic mortgage market. It was the sixth biggest lender last year and ranked seventh for outstanding mortgages balances at end-2008, with £50.5 billion of loans, representing a 4.1% market share, according to Council of Mortgage Lending data.
Anderson, speaking at a presentation to analysts on managing risk, said there were signs of stability in its UK unsecured loan book, after a rise in impairments in recent years.
“Broadly we see signs of stabilisation but it’s far too early to say there could not be further deterioration if unemployment goes through faster than expected or if interest rate rises come through,” he said.
Brian Robertson, HSBC’s chief risk officer, said returns across the industry will reduce and bank models will shift as lenders face pressure to hold more capital at local subsidiaries as well as group level.
“The regulator in Mexico wants us to have more capital in Mexico, even though we are capitalised at 10, 11 or 12% in Mexico,” Robertson said.
“They think we should possibly have more capital ... and that’s the view of the regulatory community around the world, they each wish to protect their own banking system,” he added.