Profit forecasts swing as analysts struggle to nail provision
Analysts are in a quandary predicting HSBC Holdings' 2007 earnings - estimates range from a 5.6 per cent decline to a 26 per cent gain - largely because they do not know how much the lender will set aside for bad debt, mainly for subprime woes.
Forecasts from six brokerage houses suggest the bank could make provisions from US$14.43 billion to US$17.4 billion, an increase of 36.56 per cent to 64 per cent from a year ago.
Net profit is expected to range from US$14.89 billion to US$19.91 billion, compared with US$15.78 billion in 2006.
'It's because of the divergence in expectations for the bank's provision,' said William Wong Kwok-wai, an analyst at BOCI Research, who thinks HSBC could make a provision of more than US$17 billion.
'Just HSBC Finance alone may need to book a provision charge of US$1.1 billion,' Mr Wong said, referring to the bank's United States unit, which has been hard-hit by the subprime fallout.
