Current Accounts Slowdown Detected by Bank

The total amount held in current accounts at HSBC in the UK has dropped by around five percent, thanks to customers facing rising inflation.

Europe's biggest bank, said that high levels of net withdrawals occurred over the first six months of the year. The increasing costs of food and fuel, which have caused inflation to rise to an above-target 3.8 percent on latest readings, was blamed by the firm for the trend.

On average, customers keep a balance of around £1,000 in their current accounts, recent figures show. The latest comments from HSBC, however, would mean that this figure has now reduced to £950.

The bank also announced a £1.4 billion underlying profit for the first half of the year today, a 30 percent rise over 2007. This strong result contrasts, however, with overall profits falling 28 percent to £5.1 billion, due to asset writedowns related to the credit crunch.

Joe Garner, HSBC head of personal financial services, said: "People are really feeling the squeeze. There is definitely some strain there." He added that increasing numbers of customers switching funds to savings accounts, in a bid to gain more interest on their money, could also have contributed to the exodus.

HSBC retains around 8.2 million current account customers in the UK.