Looming bad debt clouds gathering over HSBC in Latin America and New York have prompted another downgrade for the group's earnings outlook.
Investment bank Morgan Stanley yesterday advised it had revised its HSBC earnings forecast down by 6 per cent for next year and for 2003 by 3 per cent.
Banking analyst Amit Rajpal said the main reasons for the downgrade were worsening global economic conditions and increased credit risks.
'We have made no drastic changes to our pre-provisioning forecasts, but our bad debt assumption for 2002 is up from 0.5 per cent of all loans to 0.75 per cent,' Mr Rajpal said.
In dollar terms Morgan Stanley is expecting a bad debt charge in the group's profit result this year of US$1.2 billion, followed by a US$2.3 billion charge in next year's accounts.
Mr Rajpal said that no change was made in the latest review of forecast bad debt charges for this year, since the second-half estimate had already been raised from 29 basis points of total loans in the first half, to 50 basis points in the final half of the year.