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Update: HSBC gross lending breaks £22bn as broker share grows to 35% of originations

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  • 19/02/2019
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Update: HSBC gross lending breaks £22bn as broker share grows to 35% of originations
HSBC’s gross mortgage lending rose by 19 per cent in 2018 to reach £22.1bn, up from £18.5bn in 2017.

 

In its annual results the lender credited expanding broker relationships as the main driver for this growth as it witnessed a £3.9bn uptick in mortgage sales through the adviser channel.

Last year just 21 per cent of its £19bn lending came through intermediaries.

HSBC grew its market share by 0.5 per cent to 6.6 per cent and the £22.1bn annual total takes it close to Barclays’ position as the fifth biggest lender in the UK.

It also noted it had seen “margin compression” on mortgages in the UK which had slowed the growth of its retail banking revenue slightly.

However, it said it had continued to improve its processing and this had served to cut mortgage decision times.

“In the UK, we have continued to simplify our mortgage process,” HSBC said.

“Through automatic valuations, improved credit policies and increased underwriter availability, applications can be approved within 10 days.”

The average loan to value (LTV) ratio on new lending in the UK was 65%, compared with an estimated 49% for the overall mortgage portfolio.

Around 28% of the lender’s mortgage book is in Greater London, it has £3.4bn worth of mortgages on a standard variable rate (SVR), and a buy-to-let mortgage book totalling £2.8bn.

 

Interest-only exposure

HSBC also has a substantial portfolio of interest-only mortgages in the UK with balances of $14.4bn, approximately £11.3bn according to exchange rates on 31 December 2018.

At the end of 2018, the average LTV ratio in the portfolio was 46% and 96% of mortgages had an LTV ratio of 75% or less.

Of the interest-only mortgages that expired in 2016, HSBC said 84% were repaid within 12 months of expiry with a total of 92% being repaid within 24 months of expiry.

And for those expiring during 2017, 86% were fully repaid within 12 months of expiry.

 

Group profits up

Overall HSBC saw adjusted profit before tax, which excludes the effects of foreign currency translation and movements in significant items, rise three per cent to $21.7bn in 2018.

Group chief executive John Flint said: “These are good results that demonstrate progress against the plan that I outlined in June 2018.

“Profits and revenue were both up despite a challenging fourth quarter, and our return on tangible equity is significantly higher than in 2017.

“This is an encouraging first step towards meeting our return on tangible equity target of more than 11% by 2020,” he added.

 

 

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