The 14 per cent increase in lending was in marked contrast to the overall mortgage market which shrank by 10 per cent to £241bn, and this gave HSBC a 10.3 per cent share, up from 8.1 per cent in 2019.
It takes HSBC above Barclays to become the fifth largest lender in the UK, after Barclays’ lending dipped in line with the pandemic-hit market last year.
HSBC also revealed 60 per cent of its lending was completed by advisers, the first time since launching into the broker market in 2016 that more than half its lending was done through the channel.
The bank’s new originations had an average loan to value (LTV) of 70 per cent.
It was one of the few able to continue lending at the 90 per cent loan to value (LTV) level during the first lockdown but eventually had to pull back to 85 per cent LTV citing demand and wanting to preserve service levels.
Its overall mortgage book also ticked up to £110.7bn from £108.1bn, with around 26 per cent of this in Greater London and an average LTV of 51 per cent.
It has £19.4bn worth of interest-only mortgages, £3.3bn on its standard variable rate and a buy-to-let book of £2.8bn.
Payment holidays up to date
In the final three months of 2020, HSBC reported 0.19 per cent of mortgages were 90 days overdue, down from 0.23 per cent in June at the height of the pandemic but up slightly from 0.16 per cent pre-pandemic.
Within its UK operation it noted a £245m increase (US $335m) in loan losses ticking up to £366m ($499m) which was driven by deterioration in forward economic outlook due to market uncertainty.
“In the UK, 97 per cent of balances that have exited payment holiday agreements are up to date with their payments,” it added.
Profits dip, loan losses rise
Overall, HSBC’s profit after tax was down 30 per cent to $6.1bn (£5.37bn) and reported profit before tax down was 34 per cent to $8.8bn (£6.45bn) from higher expected credit losses and other credit impairment charges and lower revenue.
However, it said this was partly offset by a fall in operating expenses.
In total it reported an increase in expected credit losses (ECL) up $6.1bn (£5.37bn) to $8.8bn (£6.45bn), mainly due to the impact of the Covid-19 outbreak and the forward economic outlook.
The bank’s net interest margin of 1.32 per cent in 2020 was down 26 basis points from 2019, due to the impact of lower global interest rates.
Group chief executive Noel Quinn said: “The pandemic inevitably affected our 2020 financial performance.
“The shutdown of much of the global economy in the first half of the year caused a large rise in expected credit losses, and cuts in central bank interest rates reduced revenue in rate-sensitive business lines.
“We responded by accelerating the transformation of the group, further reducing our operating costs and moving our focus from interest rate sensitive business lines towards fee-generating businesses.
“Our expected credit losses stabilised in the second half of the year in line with the changed economic outlook, but the revenue environment remained muted.”
Quinn added: “We have had a good start to 2021, and we are cautiously optimistic for the year ahead.”