HSBC becomes fifth largest mortgage lender with £ 3 billion increase

HSBC finalized £ 24bn of new mortgages in 2020, an increase of £ 3bn from its 2019 total, significantly countering the market trend and overtaking rival Barclays.

The 14% increase in lending contrasted sharply with the overall mortgage market which fell 10% to £ 241 billion, giving HSBC a 10.3% share, down from 8.1% in 2019.

HSBC needs to overtake Barclays to become the UK’s fifth-largest lender, after Barclays lending fell based on the market hit by the pandemic last year.

HSBC also revealed that 60% of its loans were made through advisers, the first time since launching into the brokerage market in 2016 that more than half of its loans were made through the channel.

The new bank arrangements had an average loan-to-value (LTV) of 70 percent.

He was one of the few who could continue to lend at the 90 percent loan-to-value (LTV) level during the first foreclosure, but ultimately had to revert to 85 percent LTV by invoking demand and wanting to preserve service levels.

Its overall mortgage portfolio also reached £ 110.7bn from £ 108.1bn, with around 26% in Greater London and an average LTV of 51%.

It has £ 19.4bn in interest-only mortgages, £ 3.3bn on its standard floating rate and a buy-let portfolio of £ 2.8bn.

Up-to-date payment holidays

In the last three months of 2020, HSBC reported that 0.19% of mortgages were 90 days past due, up from 0.23% in June at the height of the pandemic, but up slightly from 0, 16% before the pandemic.

Within its UK operations, it noted a £ 245m (US $ 335m) increase in loan losses to £ 366m (US $ 499m), due to deteriorating financial statements. future economic outlook due to market uncertainty.

“In the UK 97% of balances that have left payment leave agreements are up to date with their payments,” he added.

Profits fall, loan losses rise

Overall, HSBC’s after-tax profit fell 30% to $ 6.1bn (£ 5.37bn) and reported pre-tax profit fell 34% to $ 8.8bn (£ 6.45bn) due to higher expected credit losses and other charges of lower credit impairment and income. .

However, he said that was partly offset by lower operating expenses.

In total, he reported an increase in expected credit losses (ECL) up from $ 6.1bn (£ 5.37bn) to $ 8.8bn (£ 6.45bn) , mainly due to the impact of the Covid-19 epidemic and the future economic outlook.

The bank’s net interest margin of 1.32% in 2020 was down 26 basis points from 2019, due to the impact of lower global interest rates.

Group CEO Noel Quinn said: “The pandemic has inevitably affected our 2020 financial performance.

“The shutdown of much of the global economy in the first half of the year caused a sharp increase in expected credit losses, and central bank interest rate cuts reduced industry revenues. activity sensitive to rates.

“We have responded by accelerating the transformation of the group, further reducing our operating costs and shifting our focus from interest rate sensitive industries to commission generating activities.

“Our expected credit losses stabilized in the second half of the year in line with the new economic outlook, but the income environment remained subdued.”

Quinn added: “We have started 2021 well and are cautiously optimistic for the year ahead.”

Owain Thomas is Editor-in-Chief and Contributor of Mortgage Solutions and Editor-in-Chief of Specialist Lending Solutions. He also has experience in the areas of protection, pensions, benefits and human resources. Owain won two Headline Money Awards and the Protection Review Journalist of the Year award.

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