HSBC hit by bad debt

This amount is 36 per cent more than the same period the year before, stating that Individual Voluntary Arrangement (IVA) use had also grown and that the tide of insolvencies is likely to continue.

“The trend of rising personal bankruptcies and IVAs seen since the second half of 2005 looks unlikely to abate in the medium term and continues to be the major influence on loan impairment charges in personal loans and credit cards,” the company said in its trading update.

HSBC is not the only large bank to feel the effects of bad debt, with Barclays last week reporting similar levels of problems.

Other lenders have already tightened their lending criteria to prevent more bad debt, yet the Insolvency Service claims that the number of defaults on loans has still managed to reach 77,000.