HSBC in warning over credit demand

HSBC has warned of a slowdown in lending, making it the third major bank to do so in the past two weeks.

HSBC has warned of a slowdown in lending, making it the third major bank to do so in the past two weeks.

It said the third quarter had been "satisfactory" but warned that recent trends pointed to a fall in the demand for credit among business borrowers.

The banking giant was beginning to see "some evidence of weaker consumer credit experience" in the UK following five interest rate rises in the past year. That echoed comments from Royal Bank of Scotland yesterday which said it saw "signs of a modest easing in consumer lending" even though that would have a minimal impact on its business.

Barclays disappointed the market two weeks ago by announcing a flat performance at its UK retail bank.

HSBC said demand for large corporate loans in its major international markets was "muted" in the third quarter but offset by growth in personal lending. Profit margins suffered a "gentle decline" due partly to competition in the UK and the bank switching to targeting more "near-prime" customers with good creditor records in the US.

Pre-tax profit before goodwill rose in all regions over the third quarter from a year ago and outlook for 2005 was "challenging to predict".

Douglas Flint, the finance director, refused to say whether it would meet profit forecasts but said if it was far off predictions, HSBC would have said so in yesterday's trading statement.

HSBC's first-half pre-tax profits surged more than 50 per cent to a record $9.4bn (£4.9bn). Its shares fell 0.5p to 872.5p.