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Future challenging says HSBC

London, May 23, 2009

Europe's biggest bank HSBC Holdings said business will remain challenging for much of next year and it may not keep its US credit card arm if the problems facing the business intensify.

HSBC said "strong revenue trends" at its investment bank continued last month and this month after a record first quarter, but warned the broader outlook remains unpredictable and will stay tough for a while.

"The rest of 2009 and probably much of 2010 will be challenging," chief executive Michael Geoghegan was quoted as saying in our sister publication, the Gulf Daily News.

Geoghegan was speaking at the bank's annual shareholder meeting yesterday (May 22).

HSBC has weathered the crisis better than most rivals thanks to a traditionally strong balance sheet and liquidity, and most of the criticism from about 500 shareholders at the meeting regarded its ill-fated 2003 takeover of US consumer finance company Household and executive pay.

Shareholders backed the bank's remuneration report, although 8.8 per cent of investors who voted were against the resolution, HSBC said.

HSBC said its US credit card business broke even in the first quarter in "very adverse" conditions, and financial and regulatory headwinds remain.

"If those become too strong, and we are not able to leverage this business more fully on a group basis, we may have to rethink it," Geoghegan said.

That decision is unlikely to be made within the next 18 months, Geoghegan said after the meeting.

About 36 million of HSBC's 100 million credit card customers are in the United States, and any global cards business with less than 100 million risks being "sub-scale", he said.

But rising unemployment could hurt and US lawmakers are on Friday expected to pass new limits on credit card interest rates and fees.

HSBC in March announced it would run off most of its troubled consumer finance business, now named HSBC Finance, but would keep cards as a core business line. – TradeArabia News Service




Tags: HSBC | London | US credit | Shareholders meeting |

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