HSBC May Say Profit Growth Slowed on U.S. Costs for Bad Loans

HSBC Holdings Plc, Europe’s biggest bank by market value, probably will report a slowdown in second- half profit growth because its U.S. consumer unit set aside more money for loan defaults.

Net income at the London-based company may have risen 17 percent to $5.47 billion from $4.67 billion a year earlier, according to the median estimate of 10 analysts surveyed by Bloomberg. Profit in the second half of 2003 climbed 58 percent. HSBC plans to report earnings on Feb. 28.

HSBC’s $15 billion purchase of Household International Inc., a lender to consumers denied credit by other institutions, increased its costs for bad loans by $429 million to $2.8 billion in the first half of last year. Chairman John Bond, who approved the 2003 acquisition, said in November that he plans to spur earnings growth by expanding in China.

“We’re waiting for their whole U.S. strategy to deliver,” said Dave Bradbury, a fund manager at Canada Life Ltd. in London, who helps oversee $5.5 billion and holds about 1 million shares of HSBC. “There are still a lot of doubters on Household.”

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