HSBC Holdings will continue to be haunted by credit problems in its United States mortgage business this year and it is likely that the bank will take a more conservative approach to acquisitions, analysts said. Shares of HSBC fell for the third successive day yesterday in Hong Kong, dropping almost 1 per cent to HK$139.30 before closing down 40 HK cents or 0.28 per cent at HK$140.20. The stock has declined 2.3 per cent since Tuesday. HSBC on Thursday issued a warning that its provision for its US mortgage business would be 20 per cent higher than market estimates. Citigroup in a report said that the additional provision made by HSBC reflected an anticipated rise in delinquencies over the 2007 to 2009 period. Goldman Sachs also warned of further setbacks. 'We would not rule out further heavy credit costs [on HSBC] in 2007,' a Goldman Sachs report said. HSBC faced a second big challenge in how to generate meaningful revenue and profit growth for its Household International business, the US consumer financing company it bought in 2003, Goldman Sachs said. The bank later renamed the unit HSBC Finance. Kent Yau Ho-yin, deputy head of the Hong Kong research team at Core Pacific-Yamaichi, expected HSBC would 'go back to basics', moving from sub-prime business and focusing on conventional lending, at which the lender was good and in which it had expertise. Former HSBC Asia Pacific chairman David Eldon said the bank could still make acquisitions if the opportunities arose. He also pointed to HSBC's previous experience in the US. HSBC had bought into Marine Midland Bank in the early 1980s and while it had not performed well in the first few years, it subsequently proved a good acquisition, Mr Eldon said. HSBC's warning on Thursday triggered analysts to cut their earnings forecasts and ratings for the bank. Credit Suisse reduced its earnings forecast by 11.2 per cent for last year and 10 per cent for this year but stated that it believed HSBC's problems had been identified and largely contained. Citigroup cut its HSBC earnings forecast for last year by 9 per cent and by 2 per cent for this year, while BOCI made reductions of 11 per cent and 10 per cent. JP Morgan cut its HSBC target price to HK$126 from HK$152 after it downgraded the bank's rating to underweight.