The HSBC group’s interim report said the quality of its mortgage book in the UK “remained high” with low levels of impairment allowances.
The group’s expected credit losses (ECL) and other credit impairment charges totalled £1bn, which was around £233m higher than last year.
It said the ECL allowance for mortgages was steady compared to 31 December 2022 at £467m.
This represents 0.28 per cent of its loans and advances to customers, up from 0.21 per cent last year.
The UK division’s mortgage balances grew by £860m.
HSBC said the average loan to value (LTV) ratio on new mortgage lending in the UK was 64 per cent, compared with an estimated 52 per cent for the overall portfolio.
HSBC’s group chief executive, Noel Quinn, said: “In the UK, we have seen limited signs of stress in the mortgage book, although we are acutely aware of the day-to-day financial challenges that some of our customers face.
“With more mortgage customers due to roll off fixed-term deals in the next six months, and further rate rises expected, tougher times are ahead. We will continue to communicate regularly with our customers, listen to their concerns, seek to offer them help should they want it and ensure they are aware of the range of products available to them.”
Interest rate profit boost
The group reported an annual surge in its profit before tax from £10.1bn to £16.9bn, while its profit after tax increased from £7.1bn to £14.1bn.
HSBC’s revenue jumped from £9.6bn to £28.7bn, which it attributed to higher interest rates across all its global businesses.
It also owed the 50 per cent increase in revenue to the reversal of an impairment related to the planned sale of its retail banking operations in France, as well as its acquisition of SVB UK which it saved from collapse earlier this year.
The group’s net interest income was up 36 per cent year-on-year in H1 and reached £14.3bn while its net interest margin improved by 46 basis points to 1.7 per cent.
Quinn added: “Six months into 2023, our financial performance has continued to improve, aided by the interest rate environment. As we move further into the next phase of our strategy focused on value creation, I am optimistic about our ability to continue to deliver strong returns for our investors.”
