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HSBC hit by bad loans write-offs

Exposure to the collapsed US home loans market has hit profits at one of the world's largest banks, HSBC.

In its year-end declaration, the bank announced that it had to write off £8.6 billion of bad debts in the past year - mainly due to last summer's meltdown in the American sub-prime mortgage sector.

Nevertheless, a strong overall performance from HSBC meant that profits were lifted to £12.2 billion - up 63 per cent over last year.

Record numbers of US homeowners defaulting on their mortgage payments had a knock-on effect on financial institutions across the world.

This was because many high street banks had purchased some of the loans on the money markets via a range of complex financial instruments.

In its profits declaration last month, Barclays admitted that it lost £1.6 billion in bad home loans.

Overall, profits were dented by 3.4 per cent for 2007 - although its net figure remained at a healthy £4.42 billion.

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