The City is bracing itself for more bad news on bad debts from HSBC when it announces its half-year results tomorrow, amid fears that the crisis in sub-prime lending in the US has spread to other parts of its loan portfolio.
Antony Broadbent, banking analyst at Sanford Bernstein, expects the bank to warn that there has been an increase in bad debts in its unsecured lending book. He is forecasting provisions against its US personal financial services business of $3.3bn (£1.6bn) in the first half of the year. While that is lower than the $4.6bn charge in the second half of 2006, that figure included a $1.8bn exceptional write-off against sub-prime loans to borrowers with poor credit records. Excluding that, his forecast implies a 17 per cent increase in provisions for the division.

This comes as other banks are reporting lower bad debt charges. Barclays said in a statement accompanying its new offer for Dutch bank ABN Amro last week that its impairment charges had fallen by 9 per cent to just under £1bn and chief executive John Varley indicated last week that it would have met its targets for cutting bad debts on its Barclaycard credit card business.
Analysts are looking for signs that the wholesale banking businesses of Barclays and Royal Bank of Scotland in particular have been affected by the turmoil in the financial markets last week. Barclays said that its BarCap increased profits by 34 per cent in the first half of the year and Varley indicated that the looming credit crunch had had no impact.

· The chief executive of the British Bankers' Association, Angela Knight, has claimed that a legal case could spell the end of free banking in the UK. The Office of Fair Trading and eight high-street banks went to court on Friday, in an effort to end the uncertainty surrounding what consumer groups have been describing as illegal, excessive bank charges on those who exceed their overdraft limits.

'Let's suppose that a judge comes to a conclusion and restricts dramatically every fee and charge. That is the time at which the current fee structure would have to change,' she said.


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