KEY POINTS:
Banking giant HSBC is expected to reveal that it is writing off US$11 billion ($13.7 billion) of its US mortgage and consumer lending, as part of a US$17 billion ($21 billion) write-off against bad debts across its global operations.
The US charges against mortgages, credit cards and other consumer lending will be almost two-thirds higher than in 2006 - a charge which was then seen as ultra-conservative - reflecting the impact of the sharp falls in the housing market and falling consumer confidence.
House prices in America are now falling at their fastest rate since records began in 1964, while repossessions and new houses for sale are at levels not seen since the Depression of the 1930s.
Banking analysts at Lehman Brothers calculate that the US provisions mean the bank will have effectively written off 14 per cent of its US loan portfolio over the past two years. But HSBC chief executive Stephen Green is likely to warn that the continued falls in the housing market and faltering US economy mean write-offs could rise still further this year.
The scale of the provisions will give added ammunition to Knight Vinke, the activist investor which is pressing the bank to increase its focus on Asia and other emerging markets. It is expected to comment on the group's results after the announcement.
Despite the write-offs, HSBC is expected to report record profits of around US$25 billion for 2007, up about 13 per cent on the US$22.1 billion achieved in 2006, while its dividend is expected to rise by 10 per cent.
But, like the other British banks which have reported in recent weeks, its profits are likely to fall sharply this year.
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