HSBC warns of credit slowdown

BANKING giant HSBC today became the second major financial group in as many days to warn of a slowdown in UK consumer borrowing.

It said it was starting to see 'some evidence of weaker consumer credit experience' in the domestic market following five interest rate rises since November last year.

However, overall it confounded sceptics with a broadly upbeat assessment of its prospects. It admitted revenue trends fell short of those in the first half but said trading was 'satisfactory' during the third quarter.

The City has been looking for some reassurance from chief executive Stephen Green following concern earlier in the year that the group was too exposed to slowing consumer activity.

HSBC said that despite the weakening UK consumer lending, it remained able to cover its credit costs with related margins.

Yesterday, the Royal Bank of Scotland said there had been signs of a modest easing in the growth rate of unsecured lending, and more recently in mortgages, in the second half of its financial year.

In an end of year trading statement, it added that its overall performance in the third quarter of 2004 had been satisfactory and that all its geographic regions were ahead of the same period last year at the pre-tax level.{1}It also said its cost efficiency in the UK was improving, but cutting costs still remains a priority target for the rest of the year and 2005.

Corporate lending had been 'muted' due to the uncertain global economic outlook. The bank said the outlook for 2005 'remained challenging to predict' given continuing uncertainty about how long it would take to resolve global economic imbalances.

However, it added: 'HSBC's broad-based business and geographic diversification is placing the group in a unique position to deliver profitable organic growth.'