HSBC 2009 Annual Report Download - page 227

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HSBC Finance also supports a variety of
initiatives to help preserve home ownership and
avoid foreclosure. A quarterly breakdown of
foreclosure data is provided below:
HSBC Finance foreclosed properties in the US
(Unaudited)
Quarter ended
2009 2008
31 Dec
2009
30 Sep
2009
30 Jun
2009
31 Mar
2009
Number of foreclosed properties at end of period ................ 6,188 9,589 6,188 6,428 7,286 8,866
Number of properties added to foreclosed inventory
in the year/quarter .............................................................. 14,845 20,051 3,496 3,546 3,550 4,253
Average loss on sale of foreclosed properties (US$000)19 .... 12 14 5 8 13 18
Average total loss on foreclosed properties20 ........................ 51% 42% 50% 52% 53% 52%
Average time to sell foreclosed properties (days) ................. 193 177 172 184 194 201
For footnotes, see page 291.
Credit quality of financial instruments
(Audited)
The five credit quality classifications set out and
defined below describe the credit quality of HSBC’s
lending, debt securities portfolios and derivatives.
Since 2008, the medium classification has been
subdivided into ‘medium-good’ and ‘medium-
satisfactory’ to provide further granularity. These
five classifications each encompass a range of more
granular, internal credit rating grades assigned to
wholesale and retail lending business, as well as the
external ratings attributed by external agencies to
debt securities.
There is no direct correlation between the
internal and external ratings at granular level, except
to the extent each falls within a single quality
classification.
Credit quality of HSBC’s debt securities and other bills
External
credit rating
Quality classification
Strong ........................................................................................................................................................................ A– and above
Medium-good ........................................................................................................................................................... BBB+ to BBB–
Medium-satisfactory ................................................................................................................................................. BB+ to B+ and unrated
Sub-standard ............................................................................................................................................................. B and below
Impaired .................................................................................................................................................................... Impaired
Credit quality of HSBC’s wholesale lending and derivatives Internal
credit rating
Probability of
default %
Quality classification
Strong ........................................................................................................................................... CRR1 to CRR2 0 – 0.169
Medium-good .............................................................................................................................. CRR3 0.170 – 0.740
Medium-satisfactory .................................................................................................................... CRR4 to CRR5 0.741 – 4.914
Sub-standard ................................................................................................................................ CRR6 to CRR8 4.915 – 99.999
Impaired ....................................................................................................................................... CRR9 to CRR10 100
Credit quality of HSBC’s retail lending Internal
credit rating21
Expected
loss %
Quality classification
Strong ........................................................................................................................................... EL1 to EL2 0 – 0.999
Medium-good ............................................................................................................................... EL3 1.000 – 4.999
Medium-satisfactory..................................................................................................................... EL4 to EL5 5.000– 19.999
Sub-standard ................................................................................................................................. EL6 to EL8 20.000 – 99.999
Impaired ....................................................................................................................................... EL9 to EL10 100+ or defaulted22
For footnotes, see page 291.