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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Fool contributor Cindy Johnson does not currently own shares of any stock in this story. No way. The Fool owns shares of Bank of America and also holds a short position in the stock in a different portfolio. The Fool owns shares of JPMorgan Chase and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.