Experts have predicted a downturn in HSBC’s share earnings next year, as a result of the sub-prime crisis deteriorating.
Analysts at Bear Stearns believe that the largest bank in Europe may be forced to report a drop in share earnings next year as US borrowers continue to default on sub-prime loans.
Bear Stearns analyst Robert Sage predicted that 2008 could see HSBC’s earnings per share drop by up to 13% to 141.9 cents, regardless of the fact that previous forecasts have predicted a 0.6% rise in share earnings to 171 cents. Bear Stearns also cut the bank’s share earnings estimate for 2007 to 163.3 cents, down from 170 cents.
HSBC has set aside $3.4 billion for sub-prime and consumer loan defaults for the third quarter of the year.