HSBC Holdings made an impairment charge of US$3.29 billion for its consumer finance unit in the United States in the first quarter but the management stopped short of saying that provisions for the mostly subprime-related debts have peaked. The write-down was at the low end of market estimates of between US$3 billion and US$4.8 billion. Pre-tax profit at HSBC Finance fell 39 per cent to US$549 million in the quarter, mostly on fair value gains from its own investment in debt instruments. Setting that aside, the company had a lower than expected pre-tax loss of US$647 million. Meanwhile, the group also made an additional write-down of US$2.6 billion in its global banking and markets operation. Shares in HSBC rose 2.53 per cent at one point to 887.87 pence (HK$135.50) in London after the results announcement, compared with the previous close of 866 pence. It was last at 882 pence. The impairment charge in the first quarter jumped 74.57 per cent or US$1.4 billion from the year-ago level, but dropped 28.79 per cent from US$4.62 billion for the fourth quarter of last year. Half the charge was related to real-estate lending, while the rest involved unsecured lending, including credit card and car financing. Group chief executive Michael Geoghegan said in a conference call that the increase in provision had moderated a little, but it still was hard to tell whether it was from an improving economy or a seasonal swing. He said he tended to believe it was more a seasonal factor. The write-down process was 'slowing rather than stopping', Mr Geoghegan said, adding that the situation in the US could be affected by other factors, including the presidential election and the tax rebates. 'The outlook for the rest of the year remains unusually difficult to foresee in the current environment,' chairman Stephen Green said in a statement, adding it seemed likely the deterioration in the US housing market would extend into next year. Ivan Li, an analyst at Kim Eng, said he was cautiously optimistic on HSBC despite the seemingly improved performance of HSBC Finance. 'I can't say whether its provision has peaked until the US market improves,' he said. At the US unit, the mortgage business with loans more than two months overdue increased to 12.5 per cent in the first quarter from 11.2 per cent, while other consumer lending rose to 5 per cent from 4.2 per cent. HSBC Finance has restructured 1,500 housing loans with an aggregate balance of about US$270 million before the resetting of mortgage rates. HSBC said that pre-tax profit for the group as well as for its emerging markets worldwide rose in the first quarter from a year ago. In Hong Kong, the strong performance was driven by growth in deposits, a wider interest margin and increasing commercial lending. Separately, HSBC USA made a net loss of US$276 million in the first quarter, compared with net income of US$293 million a year earlier.