In its third quarter results, HSBC reported a 13 per cent share of the UK mortgage market – almost double the 6.9 per cent share of the market it reported until June, and significantly higher than the 7.5 per cent it claimed in 2019.
Based on figures for 2019, under normal circumstances, if HSBC were to maintain that share for the whole year it would potentially become the second largest lender in the market – leapfrogging Nationwide, NatWest, Santander and Barclays.
Bank of England data showed the value of new lending in July was £17.7bn with August at £18.8bn as the market continued to recover from the Covid-19 lockdown.
And there were 129,424 mortgage approvals in August on par with the typical monthly numbers last year.
Mortgage balances up £3.9bn
In it’s Q3 data, HSBC noted its UK mortgage book balance had increased by approximately £3.89bn ($5bn) during the three months of July to September
The bank said it had seen “strong momentum as we continue to support homebuyers. Additional growth [is] expected from lockdown easing supported by stamp duty changes.”
The bank also said it had 17,000 UK mortgages worth around £2.88bn ($3.7bn) in customer relief at the end of September, around 2.6 per cent of its loan book.
This is down from 65,000 payment holidays during the pandemic which accounted for around 10 per cent of its UK mortgage borrowers.
Globally, it had 76,000 mortgage borrowers in some form of forbearance for mortgages worth £8.94bn ($11.5bn) making up 3.5 per cent of all mortgages.
Net interest margin for its UK bank continued to fall, hitting 1.6 per cent, down from 1.68 per cent at the end of June, which had seen a notable drop from the recent peak of 2.1 per cent in March.
This reflected a trend across the business with the net interest margin down 36 basis points to 1.2 per cent, with net interest income down £1.09bn ($1.4bn) as global interest rates fell because of the Covid-19 outbreak.
Losses at ‘lower end’ of scale
Overall, while profits and revenue were all down significantly on the three months compared to the same period last year, the lender said it was a “promising” performance as loan losses for 2020 are trending towards the lower end of the £6.2bn ($8bn) to £10.1bn ($13bn) range.
Profit after tax was down 46 per cent to £1.55bn ($2.0bn) and profit before tax was down 36 per cent to £2.41bn ($3.1bn), mainly from lower revenue.
Reported revenue also fell 11 per cent to £9.25bn ($11.9bn), reflecting the impact of interest rate reductions on our deposit franchises across all global businesses, partly offset by favourable market impacts in life insurance manufacturing.
Group chief executive Noel Quinn said: “These were promising results against a backdrop of the continuing impacts of Covid-19 on the global economy.
“I’m pleased with the significantly lower credit losses in the quarter, and we are moving at pace to adapt our business model to a protracted low interest rate environment.
“The group’s capital and liquidity ratios strengthened further in the quarter despite the challenging economic conditions.”
Quinn noted the transformation of the group away from interest-rate to fee-generating business was accelerating.
He added a decision on whether to pay a dividend for the 2020 financial year will depend on economic conditions in early 2021, and be subject to regulatory consultation, with a conservative dividend paid if circumstances allow.