HSBC 2004 Annual Report Download - page 15

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programmes. At 31 December 2004 HSBC Finance
Corporation had over 57 million customers with total
gross advances of US$141.9 billion. Consumer
Finance products are offered through the following
businesses of HSBC Finance Corporation:
The consumer lending business is one of the
largest sub-prime home equity originators in the US,
marketed under the HFC and Beneficial brand names
through a network of over 1,300 branches in 46
states, direct mail, telemarketing, strategic alliances
and the internet. ‘Sub-prime’ is a US categorisation
which describes customers who have limited credit
histories, modest incomes, high debt-to-income
ratios, high loan-to-value ratios (for real estate
secured products) or have experienced credit
problems caused by occasional delinquencies, prior
charge-offs, bankruptcy or other credit-related
actions. Consumer lending products include secured
and unsecured loans such as first and second lien
closed-end mortgages, open-ended home equity
loans, personal loans and retail finance contracts.
Consumer lending also offers a near-prime mortgage
product which was first introduced in 2003 to
broaden the range of customers to which its products
are relevant.
The mortgage services business purchases first
and second lien residential mortgage loans, including
open-end home equity loans, from a network of over
200 unaffiliated third party lenders
(‘correspondents’ ) in the US. Purchases are
primarily of pools of loans (‘bulk acquisitions’ ), but
also include individual loan portfolios (‘flow
acquisitions’ ), made under predetermined
underwriting guidelines. Forward commitments are
offered to selected correspondents to strengthen
relationships and create a sustainable growth channel
for this business. HSBC Finance Corporation,
through its subsidiary, Decision One Mortgage
Company, also offers mortgage loans referred by
mortgage brokers.
The retail services business is one of the
largest providers of third party private label credit
cards (or store cards) in the US based on receivables
outstanding, with over 70 merchant relationships and
15.5 million active customer accounts.
In addition to originating and refinancing motor
vehicle loans, HSBC Finance Corporation’s motor
vehicle finance business purchases retail instalment
contracts of US customers who do not have access to
traditional prime-based lending sources. The loans
are largely sourced from a network of approximately
5,200 motor dealers.
The credit card services business is the
sixth largest issuer of MasterCard®1 and Visa®1
credit cards in the US, and also includes affiliation
cards such as the GM Card® and the AFL-CIO
Union Plus®2 credit card. Also, credit cards issued in
the name of Household Bank and Orchard Bank
brands are offered to customers under-served by
traditional providers, or are marketed primarily
through merchant relationships established by the
retail services business.
A wide range of insurance services is offered
by HSBC Finance Corporation to customers in the
US, the UK and Canada who are typically not well
served by traditional sources.
The taxpayer financial services business
accelerates access to funds for US taxpayers who are
entitled to tax refunds. The business is seasonal with
most revenues generated in the first three months of
the year.
HSBC Finance Corporation’s business in the
UK provides mid-market consumers with mortgages,
secured and unsecured loans, insurance products,
credit cards and retail finance products. It
concentrates on customer service through its
216 HFC Bank and Beneficial branches, and
finances consumer electronic goods, through its
retail finance operations. In Canada, similar products
are offered, and deposits are taken, through HSBC
Finance Corporation’ s trust operations there.
Commercial Banking
HSBC is one of the world’ s leading banks in the
provision of financial services and products to small,
medium-sized and middle market businesses, with
over two million customers including sole
proprietors, partnerships, clubs and associations,
incorporated businesses and publicly quoted
companies.
At 31 December 2004, HSBC had total
commercial customer account balances of
US$137.8 billion and total commercial customer
loans and advances, net of suspended interest and
provisions for bad and doubtful debts, of
US$129.9 billion.
Commercial Banking places particular emphasis
on multi-disciplinary and geographical collaboration
in meeting its commercial customers’ needs, thereby
1Visa is a registered trademark of VISA USA, Inc.and
MasterCard is a registered trademark of MasterCard
International, Incorporated.
2The Union Plus MasterCard and Visa credit card
programme is an affinity arrangement with Union Privilege
under which credit cards are offered to members of unions
affiliated with the American Federation of Labor and
Congress of Industrial Organizations (‘AFL-CIO’).