Bargain hunting

4 August 2008 By George Hay Follow @gfhay

The UK s biggest bank did much as expected in the first half. It remains exposed to subprime through Household, the US lender. But its capital and liquidity positions are better than those of many peers. Now HSBC should follow rival Santander and snap up some bargains.

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On August 4, HSBC announced $10.25bn of pretax profits for the first half of 2008. That was down 25% from last year but slightly ahead of analysts' estimates, after taking $3.9bn of credit market write downs and $0.8bn of positive fair value adjustments.

The total impairment charge, at $10.1bn, was up 58% on the equivalent for the first half of 2007, but down 8% on the $10.9bn charge taken at the end of December.

Impairments on the bank's Household business were slightly better than expected at $7.2bn.

The percentage of Household's consumer lending book which is more than two months in arrears rose to 5.7% from 5% in the first quarter of the year. Arrears in Household's Mortgage Services book rose from 12.5% to 13% over the first quarter.

HSBC shares fell 1% to 828p by the end of trading.

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