U.S. Stocks Up; MBIA Loss

123jump.com Staff
12 May, 2008
New York City

U.S. stocks opened higher after MBIA and IndyMac reported losses and HSBC set aside $3.2 billion to cover losses in its U.S. residential mortgage portfolio. China increased bank reserve ratio for the fourth time to curb the rising inflation and India reported weak industrial production gains. MBIA reported a loss of $2.4 billion compared to $198 million a year ago. IndyMac, the troubled bank with a significant mortgage loan exposure raised $97 million for the year so far.

[R]9:40AM New York – U.S. stocks opened higher after banks and bond insurer MBIA reported losses.

U.S. stocks opened higher after MBIA and IndyMac reported losses and HSBC set aside $3.2 billion to cover losses in its U.S. residential mortgage portfolio. China increased bank reserve ratio for the fourth time to curb the rising inflation and India reported weak industrial production gains.

HSBC Holdings set aside $3.2 billion in the first quarter 2008 compared to $4.6 billion in the first quarter a year ago. In the fourth quarter the bank took a charge of $1.6 billion. The bank also said that it is experiencing ‘higher delinquencies across major lending portfolios.’

HSBC in the press release added, “The vast majority of our mortgage customers continue to meet their commitments. At 31 March 2008, 5.0 per cent of mortgages in our US branch-based consumer lending business were two months or more overdue, compared with 4.2 per cent at 31 December 2007. The equivalent figures for our mortgage services business were 12.5 per cent and 11.2 per cent, respectively. This trend of rising delinquency ratios will continue as balances continue to be run off.”

HSBC Holdings, Plc ((HBC)) stock rose $2.41 to $86.50.

MBIA Inc., the holding company for MBIA Insurance Corporation reported first quarter 2008 loss of $2.4 billion compared to $198.6 million a year ago. In the quarter loss per share was $13.03 compared to $1.46 per share.

Total revenue was $741.7 million, before unrealized losses compared to $738.3 million in last year’s first quarter. MBIA generated operating cash flow of $257.4 million for the three months ended March 31, 2008 compared with $142.1 million for the three months ended March 31, 2007.

MBIA has $668 billion of net par insurance in force, of which 66 percent is on public finance bonds, and 34 percent is on structured financings. The majority of the net loss in the quarter was the result of a pre-tax $3.6 billion unrealized loss on insured credit derivatives, which included $0.8 billion of credit impairments.

MBIA stock ((MBI)) gained 77 cents to $10.21.

IndyMac Bancorp, Inc. reported first quarter loss of $184.2 million compared to net income of $52.4 million. In the quarter the bank lost $2.27 per share compared to earnings per share of 70 cents a year ago. The bank increased its credit reserve 13% from a year ago to $2.7 billion and in the quarter the bank realized $334 million in losses.

The bank through its direct stock purchase plan raised $39 million at the end of the quarter and raised $97 million for the year-to-date as of May 9 of this year. The bank raised $676 million in 2007 however the losses at the bank continue to mount.

The bank reported core Tier 1 ratio of 5.74%, risk based Tier 1 ratio was 9% and total risk based capital ratio was 10.26%. The bank anticipated $20 million loss in the current quartet and does not see it return to profitability this year.

IndyMac stock ((IMB)) fell 10 cents to $3.33.

Asian markets review

In Tokyo Nikkei 225 Index closed higher 88.02 or 0.64% to 13,743.36, in Australia ASX 200 index higher 56.70 or 0.98% to close 5,828.50. In Malaysia KL Composite index increased 7.82 or 0.61% closed to 1,293.09. Market of Hong Kong was closed today.

In Thailand SET index closed lower 4.49 or 0.53% to 842.22 and Indonesia JSE Index edged increased 2.98 or 0.13% to 2,378.00. Sensex index in India increased 123.90 or 0.74% to 16,860.90. Market of South Korea was closed today.