HSBC has stepped up the rate at which it writes off loans to poor Americans to an unprecedented $51 million (£25.7 million) a day as the British bank grapples with an increase in people defaulting on their mortgages, credit cards, personal loans and car finance.

Strong results unveiled in almost every other part of HSBC yesterday were overshadowed by the US sub-prime business, which wrote off $11.7 billion in dud loans last year and said the situation was still deteriorating.

Write-offs in HSBC Finance, almost all of them because of US sub-prime business, have risen from $1.89 billion in the first quarter to $2.19 billion in the second, $3.48 billion in the third and $4.63 billion in the fourth. The quantity of loans more than two months in arrears has also soared during the four quarters, from $7.4 billion to $12.5 billion.

Stephen Green, HSBC’s chairman, said that there might be worse to come. “We’re not in a position to say we’ve turned the corner or passed the worst,” he said.

The outcome would depend on the American economy, and in particular on unemployment levels and house prices, Mr Green said. “But the vast majority of people do want to pay their debts back,” he said. “People aren’t looking for an excuse to hand their keys in and run.”

The increasing write-offs came as the bank released details of a new executive reward scheme, which will allow bonus awards of up to 400 per cent of pay. Michael Geoghegan, the chief executive, stands to collect a bonus of up to £4 million on top of his base salary of £1.07 million subject to performance criteria. Mr Geoghegan was paid a total of £3.5 million last year, according to HSBC’s annual report, published yesterday. This was an increase of 23 per cent on the £2.9 million that he received in 2006.

It emerged yesterday that an unnamed director, thought to be a senior investment banker in HSBC, received pay and bonus of about £10 million.

HSBC, which is the only UK bank directly lending in the US sub-prime market, also revealed that it had been hit by falling values of asset-backed securities, partly secured on sub-prime mortgages. It wrote off $2.13 billion in its investment banking division.

HSBC bought the Household International business for £9 billion in 2003 in an aggressive push into lending to people with a history of defaulting on personal borrowings or no credit history at all. The business has about $150 billion of loans outstanding to 55 million people.

Mr Green denied that the deal had been a mistake. “I think there are lessons to be learnt,” the chairman said, but he insisted that the deal had brought HSBC useful credit card capability and that the business model still had a future.

Mr Green dismissed suggestions by the rebel shareholder Knight Vinke that HSBC should walk away from the US sub-prime business. “To walk away would be unthinkable and irresponsible,” he said.

HSBC, which acknowledged a problem in the business more than a year ago, has since scrapped sourcing mortgages from agents, tightened its lending terms, pruned its branch network and sacked the local management.

Outside US sub-prime, the bank produced a better performance, lifting pretax profits 10 per cent to $24.2 billion, a record, in the year, despite total bad debts of $17.2 billion, up 63 per cent.

HSBC shares rose by 3 per cent to 790p in a falling bank sector.

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