London-based HSBC Holdings
It must be easier to fess up when North America accounts for only about 15% of revenue and 2% of pre-tax profit. That makes me want to delve into what HSBC has to say, particularly in light of the recent surprisingly large decline in home values. According to Zillow, in the first quarter, U.S. home values posted their largest decline since late 2008, falling 3% in the quarter and 1.1% in March.
It was just last month that Bank of America's
There are more than a trillion dollars of residential mortgages sitting on the books of just a handful of large U.S. banks, including B of A, Wells Fargo
Residential Mortgages ($M)
Residential Mortgages % of Total Capital
|Bank of America||$274,536||$229,094||120%|
Source: Capital IQ, a division of Standard & Poor's.
Early in 2007, HSBC was famously among the first to call the U.S. subprime crisis. That lends weight to its concern about weakness in U.S. housing. The big U.S. lenders are exposed to the same market dynamics, whether or not they'll admit it to investors or themselves. What's more, there's so much wiggle room nowadays in how banks value loans that you can't even trust their historical financials.
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