The U.S. retail banking arm of HSBC Holdings PLC posted its first full-year profit in three years, and loan losses fell at another U.S. affiliate.
Europe's biggest bank on Monday said that that its North American division — anchored by the 477-branch HSBC USA Inc. and mortgage and credit card giant HSBC Finance Corp. — benefited from fewer problem loans in 2010. Still, tepid lending and new regulatory costs weighed on profits.
"Our results in 2011 will continue to be affected in general terms by the strength of the U.S. economy and the impact of regulatory changes on our business," HSBC said in its annual report.
HSBC USA posted a profit of $1.56 billion in 2010 on lower loss provisions for credit cards and other products. The division — which offers retail, business banking and wealth management services in 14 states and Washington D.C. — lost $142 million in 2009 and $1.69 billion in 2008. It also benefited from higher trading revenue that offset declining loan interest income.
HSBC Finance, the successor to subprime lender Household Finance Corp. that HSBC is essentially winding down, lost $1.9 billion in 2010 after posting a loss of $7.45 billion in 2009. HSBC Finance is running off about $57 billion in real estate, personal and other types of non-core loans.
HSBC's strategy in the U.S. focuses on wealthy people and businesses that have financial interest overseas. To that end, it opened five new branches in 2010 in international hubs like Los Angeles while growing the number of customers with high-end savings accounts by 37%, to more than 700,000.
Overall, HSBC Holdings' net income was $13.2 billion in 2010, up from $5.83 billion in 2009.
