HSBC Holdings said it plans to start "gently growing" its U.S. consumer finance business again, despite a quarter-on-quarter drop in profitability at the unit as the U.S. economy slowed.
But chief finance officer Douglas Flint noted that the bank won't restart unsecured lending or writing subprime mortgages and auto loans — areas that led to about $50 billion in bad loan charges in the past few years and whose existing loan books are now in run-off.
In 2002 HSBC agreed to buy Household Finance, a top ranked residential subprime lender, for $14 billion. The deal turned out to be a financial boondoggle for the British bank.
Even though HSBC will stay away from nonconforming mortgage lending, it will begin to target new customers at its remaining credit-card division.
Bank executives have previously said the U.S. represents good opportunities for growth once the economy proves to be firmly on the mend.
"Our longer-term plans on the basis of what we have seen so far is that it's performing well and is very profitable, and we hope to maintain it and at some point hope to gently grow it again," Flint told a conference call.
His comments came after the unit, HSBC Finance, reported a deepening loss of $1.01 billion in the second quarter, from $472 million in the first quarter. Combined with a tepid performance from HSBC's other main U.S. operating arm, HSBC USA, the loss meant that North America was the only region where HSBC didn't turn an underlying profit in the first half of 2010.
