The annual results from HSBC showed that, despite this fall in new loans lent, its mortgage market share widened from 7.7 per cent to eight per cent.
This represented a net growth of £3.8bn in its mortgage business.
HSBC UK said the quality of its mortgage book remained strong, and the average loan to value (LTV) on new lending was 65 per cent, while the overall portfolio had an average LTV of 53 per cent.
The bank said borrowers were still experiencing financial pressures, as the base rate remained high to bring down inflation. It said it would monitor the impact from this on borrowers facing higher monthly payments.
While HSBC UK’s mortgage portfolio was still “resilient”, it said, there was a noted increase in the level of stress among borrowers, “albeit from a low base”.
Overall, the lender’s loans and advances to customers increased by £7.7bn, which it said was mainly due to a £4.1bn growth in mortgage lending. Its mortgage book exceeded £129bn at the end of the year.
Profits surge 84 per cent at HSBC
For 2023, HSBC UK reported an 84 per cent jump in its profit before tax to £6.67bn, which included a £1.3bn provision gain from its acquisition of Silicon Valley Bank.
It also saw its net interest income (NII) rise from £6.2bn to £7.7bn. Although the bank reported a higher NII due to interest rate increases, it said this was partially offset by the competitive mortgage market and deposit pricing.
Its net interest margin (NIM) widened from 1.89 per cent in 2022 to 2.43 per cent in 2023.
HSBC UK reduced its expected credit losses (ECLs) by £61m to £421m in 2023, due to “lower provisions for forward-looking economic uncertainty”.
Last month, it was announced that the lender was fined £57m by the Prudential Regulation Authority (PRA) for failing to protect its customers’ deposits. In the annual financial report, HSBC said this had been “fully provided for”.
