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HSBC Finance Corp – ‘10-Q’ for 3/31/98

As of: Tuesday, 5/12/98 · For: 3/31/98 · Accession #: 354964-98-15 · File #: 1-08198

  As Of                Filer                Filing    For·On·As Docs:Size

 5/12/98  HSBC Finance Corp                 10-Q        3/31/98    5:69K

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      24    117K 
 2: EX-12       Statement re: Computation of Ratios                    1      7K 
 3: EX-21       Subsidiaries of the Registrant                         5     20K 
 4: EX-27       Financial Data Schedule (Pre-XBRL)                     2±     7K 
 5: EX-99.1     Miscellaneous Exhibit                                  1      7K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Credit Loss Reserves Delinquency Exhibits and Reports on Form 8-K Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations
1	1st Page - Filing Submission
3	Item 1. Financial Statements
13	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
19	Credit Loss Reserves
20	Delinquency
22	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st Page of 24 TOC ↑Top Previous Next ↓Bottom Just 1st
 

FORM 10-Q             

UNITED STATES             
SECURITIES AND EXCHANGE COMMISSION              
Washington, D.C. 20549              

(Mark One)                                                                      

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                    
SECURITIES EXCHANGE ACT OF 1934                                       

For the quarterly period ended March 31, 1998                                   
--------------    

OR              

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                   
SECURITIES EXCHANGE ACT OF 1934                                       

For the transition period from               to                                 
             -------------    --------------

Commission file number 1-8198                                                   
------                            

HOUSEHOLD INTERNATIONAL, INC.             
------------------------------------------------------              
(Exact name of registrant as specified in its charter)              

Delaware                           36-3121988                         
------------------------      ------------------------------------              
(State of Incorporation)      (I.R.S. Employer Identification No.)              

2700 Sanders Road, Prospect Heights, Illinois     60070                         
-------------------------------------------------------                         
(Address of principal executive offices)     (Zip Code)                         

Registrant's telephone number, including area code: (847) 564-5000              
                                      --------------

Indicate by check mark whether the registrant (1) has filed all                 
reports required to be filed by Section 13 or 15(d) of the                      
Securities Exchange Act of 1934 during the preceding 12 months (or              
for such shorter period that the registrant was required to file                
such reports), and (2) has been subject to such filing requirements             
for the past 90 days. Yes [X] No [ ]                                            

At April 30, 1998, there were 107,331,246 shares of registrant's                
common stock outstanding.                                                       

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HOUSEHOLD INTERNATIONAL, INC. AND SUBSIDIARIES              

Table of Contents             

PART I.   Financial Information                            Page                 
                                          ----
Item 1. Financial Statements                                                

Condensed Consolidated Statements of Income                 
(Unaudited) - Three Months                                  
Ended March 31, 1998 and 1997                       2       

Condensed Consolidated Balance Sheets -                     
March 31, 1998 (Unaudited) and December 31, 1997    3       

Condensed Consolidated Statements of Cash Flows             
(Unaudited) - Three Months Ended                            
March 31, 1998 and 1997                             4       

Financial Highlights                                5       

Notes to Interim Condensed Consolidated Financial           
Statements (Unaudited)                              6       

Item 2. Management's Discussion and Analysis of                             
Financial Condition and Results of Operations      12       

PART II.  Other Information                                                     

Item 6. Exhibits and Reports on Form 8-K                   21               

Signature                                                  22               

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PART 1.   FINANCIAL INFORMATION                                                 

Item 1.   FINANCIAL STATEMENTS                                                  

Household International, Inc. and Subsidiaries                                  

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)                         
-------------------------------------------------------                         

All amounts, except per share data, are stated in millions.                     

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------ 
Three months ended March 31                                             1998          1997 
------------------------------------------------------------------------------------------ 
                                                                                           
Finance income                                                        $771.3        $751.6 
Other interest income                                                   12.3           8.3 
Interest expense                                                       388.6         365.1 
                                                                      ------        ------ 
Net interest margin                                                    395.0         394.8 
Provision for credit losses on owned receivables                       261.5         293.4 
                                                                      ------        ------ 
Net interest margin after provision for credit losses                  133.5         101.4 
                                                                      ------        ------ 
Securitization income                                                  377.8         330.7 
Insurance revenues                                                      74.5          65.4 
Investment income                                                       29.6          33.2 
Fee income                                                              99.5          77.4 
Other income                                                            14.8          69.1 
                                                                      ------        ------ 
Total other revenues                                                   596.2         575.8 
                                                                      ------        ------ 
Salaries and fringe benefits                                           165.2         147.6 
Occupancy and equipment expense                                         54.5          53.9 
Other marketing expenses                                                81.1          81.9 
Other servicing and administrative expenses                             85.8         109.4 
Amortization of acquired intangibles and goodwill                       42.4          36.8 
Policyholders' benefits                                                 47.7          47.0 
                                                                      ------        ------ 
Total costs and expenses                                               476.7         476.6 
                                                                      ------        ------ 
Income before income taxes                                             253.0         200.6 
Income taxes                                                            82.7          69.1 
                                                                      ------        ------ 
Net income                                                            $170.3        $131.5 
                                                                      ======        ====== 

Earnings per common share:                                                                 
  Net income                                                          $170.3        $131.5 
  Preferred dividends                                                   (2.9)         (3.2)
                                                                      ------        ------ 
  Earnings available to common shareholders                           $167.4        $128.3 
                                                                      ======        ====== 
  Average common shares                                                107.2          97.2 
                                                                      ------        ------ 
  Average common and common equivalent shares                          108.7          98.6 
                                                                      ------        ------ 
  Basic earnings per common share                                     $ 1.56        $ 1.32 
                                                                      ------        ------ 
  Diluted earnings per common share                                   $ 1.54        $ 1.30 
                                                                      ------        ------ 
Dividends declared per common share                                      .45           .39 
                                                                      ======        ====== 

See notes to interim condensed consolidated financial statements.               

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Household International, Inc. and Subsidiaries                                  

CONDENSED CONSOLIDATED BALANCE SHEETS                                           
-------------------------------------                                           

In millions, except share data.                                                 

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------- 
                                                                       March 31,     December 31, 
                                                                           1998              1997 
------------------------------------------------------------------------------------------------- 
ASSETS                                                              (Unaudited)                   
------                                                                                            
                                                                                                  
Cash                                                                  $   195.1         $   280.4 
Investment securities                                                   2,625.5           2,285.6 
Receivables, net                                                       25,672.1          23,862.7 
Acquired intangibles and goodwill, net                                  1,894.7           1,754.7 
Properties and equipment, net                                             279.6             309.4 
Real estate owned                                                         139.6             127.3 
Other assets                                                            2,090.3           1,682.5 
                                                                      ---------         --------- 
Total assets                                                          $32,896.9         $30,302.6 
                                                                      =========         ========= 

LIABILITIES AND SHAREHOLDERS' EQUITY                                                              
------------------------------------                                                              
Debt:                                                                                             
  Deposits                                                            $ 1,881.6         $ 1,788.9 
  Commercial paper, bank and other borrowings                           6,769.0           6,081.0 
  Senior and senior subordinated debt (with                                                       
     original maturities over one year)                                16,297.1          14,849.0 
                                                                      ---------         --------- 
Total debt                                                             24,947.7          22,718.9 
Insurance policy and claim reserves                                     1,140.5           1,257.2 
Other liabilities                                                       1,646.4           1,485.3 
                                                                      ---------         --------- 
Total liabilities                                                      27,734.6          25,461.4 
                                                                      ---------         --------- 
Company obligated mandatorily redeemable                                                          
  preferred securities of subsidiary trusts*                              375.0             175.0 
                                                                      ---------         --------- 
Preferred stock                                                           150.0             150.0 
                                                                      ---------         --------- 
Common shareholders' equity:                                                                      
  Common stock, $1.00 par value, 250,000,000                                                      
     shares authorized, 124,331,175 shares                                                        
     issued at March 31, 1998 and                                                                 
     December 31, 1997                                                    124.3             124.3 
  Additional paid-in capital                                            1,532.2           1,531.8 
  Retained earnings                                                     3,701.3           3,582.1 
  Foreign currency translation adjustments                               (129.1)           (128.3)
  Unrealized gain on investments, net                                       7.6               3.6 
  Less common stock in treasury, 17,013,238 and                                                   
     17,173,143 shares at March 31, 1998 and                                                      
     December 31, 1997, respectively, at cost                            (599.0)           (597.3)
                                                                      ---------         --------- 
Total common shareholders' equity                                       4,637.3           4,516.2 
                                                                      ---------         --------- 
Total liabilities and shareholders' equity                            $32,896.9         $30,302.6 
                                                                      =========         ========= 

* As described in note 8 to the financial statements, the sole                  
assets of the three trusts are Junior Subordinated Deferrable               
Interest Notes issued by Household International, Inc. in March             
1998, June 1996 and June 1995, bearing interest at 7.25, 8.70               
and 8.25 percent, respectively, with principal balances of                  
$206.2, $103.1 and $77.3 million, respectively, and due December            
31, 2037, June 30, 2036 and June 30, 2025, respectively.                    

See notes to interim condensed consolidated financial statements.               

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Household International, Inc. and Subsidiaries                                  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                     
-----------------------------------------------------------                     

In millions.                                                                    

                                                        [Enlarge/Download Table]

----------------------------------------------------------------------------------------------- 
Three months ended March 31                                               1998             1997 
----------------------------------------------------------------------------------------------- 
                                                                                                
CASH PROVIDED BY OPERATIONS                                                                     
Net income                                                           $   170.3        $   131.5 
Adjustments to reconcile net income to cash                                                     
  provided by operations:                                                                       
  Provision for credit losses on owned receivables                       261.5            293.4 
  Insurance policy and claim reserves                                   (116.5)            21.6 
  Depreciation and amortization                                           65.9             62.4 
  Net realized (gains) losses from sales of assets                         -              (55.0)
  Other, net                                                            (181.6)            61.8 
                                                                     ---------        --------- 
Cash provided by operations                                              199.6            515.7 
                                                                     ---------        --------- 
INVESTMENTS IN OPERATIONS                                                                       
Investment securities:                                                                          
  Purchased                                                             (327.9)          (407.8)
  Matured                                                                 67.1             94.3 
  Sold                                                                   167.6            210.6 
Short-term investment securities, net change                            (231.1)           (19.6)
Receivables:                                                                                    
  Originations, net                                                   (6,709.3)        (5,765.5)
  Purchases and related premiums                                      (2,106.2)          (234.2)
  Sold                                                                 6,555.1          7,305.1 
Properties and equipment purchased                                       (11.6)           (15.5)
Properties and equipment sold                                             20.4              4.9 
                                                                     ---------        --------- 
Cash increase (decrease) from investments in operations               (2,575.9)         1,172.3 
                                                                     ---------        --------- 
FINANCING AND CAPITAL TRANSACTIONS                                                              
Short-term debt and demand deposits, net change                          646.6           (938.6)
Time certificates, net change                                             91.8           (111.5)
Senior and senior subordinated debt issued                             2,445.8            772.3 
Senior and senior subordinated debt retired                           (1,025.4)        (1,328.4)
Policyholders' benefits paid                                             (27.4)           (38.4)
Cash received from policyholders                                          26.6             69.9 
Shareholders' dividends                                                  (51.1)           (41.1)
Redemption of preferred stock                                              -              (55.0)
Purchase of treasury stock                                                (9.8)             -   
Issuance of common stock                                                   1.9              9.2 
Issuance of company obligated mandatorily redeemable                                            
  preferred securities of subsidiary trusts                              200.0              -   
                                                                     ---------        --------- 
Cash increase (decrease) from financing and                                                     
  capital transactions                                                 2,299.0         (1,661.6)
                                                                     ---------        --------- 
Effect of exchange rate changes on cash                                   (8.0)            28.5 
                                                                     ---------        --------- 
Increase (decrease) in cash                                              (85.3)            54.9 
Cash at January 1                                                        280.4            239.2 
                                                                     ---------        --------- 
Cash at March 31                                                     $   195.1        $   294.1 
                                                                     =========        ========= 
Supplemental cash flow information:                                                             
Interest paid                                                        $   359.5        $   335.8 
                                                                     ---------        --------- 
Income taxes paid                                                          6.1             10.6 
                                                                     ---------        --------- 

See notes to interim condensed consolidated financial statements.               

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Household International, Inc. and Subsidiaries                                  

FINANCIAL HIGHLIGHTS                                                            
--------------------                                                            

All dollar amounts are stated in millions.                                      

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------- 
Three months ended March 31                                                1998              1997 
------------------------------------------------------------------------------------------------- 
                                                                                                  
Net income                                                            $   170.3         $   131.5 
                                                                      ---------         --------- 
Net interest margin and other revenues <F1>                               943.5             923.6 
                                                                      ---------         --------- 
Return on average common shareholders'                                                            
  equity <F2>                                                              14.7%             17.1%
                                                                      ---------         --------- 
Return on average owned assets <F2>                                        2.14              1.77 
                                                                      ---------         --------- 
Managed basis efficiency ratio, normalized <F3>                            35.6              38.3 
                                                                      ---------         --------- 

All dollar amounts are stated in millions.                                                        
------------------------------------------------------------------------------------------------- 
                                                                      March 31,      December 31, 
                                                                          1998               1997 
------------------------------------------------------------------------------------------------- 
Total assets:                                                                                     
  Owned                                                              $32,896.9          $30,302.6 
  Managed                                                             53,593.3           51,868.4 
                                                                     ---------          --------- 
Receivables:                                                                                      
  Owned                                                              $25,644.3          $23,811.0 
  Serviced with limited recourse                                      20,696.4           21,565.8 
                                                                     ---------          --------- 
  Managed                                                            $46,340.7          $45,376.8 
                                                                     =========          ========= 
Total shareholders' equity as a percent of                                                        
  owned assets <F4>                                                      15.69%             15.98%
                                                                     ---------          --------- 
Total shareholders' equity as a percent of                                                        
  managed assets <F4>                                                     9.63               9.33 
                                                                     ---------          --------- 
<FN>                                                                                              
<F1>  Policyholders' benefits have been netted against other revenues.                            

<F2>  Annualized.                                                                                 

<F3>  Ratio of normalized operating expenses to managed net interest                              
      margin and other revenues less policyholders' benefits.                                     

<F4>  Total shareholders' equity at March 31, 1998 and December 31,                               
      1997 includes common shareholders' equity, preferred stock and                              
      company obligated mandatorily redeemable preferred securities                               
      of subsidiary trusts.                                                                       
</FN>                                                                                             

See notes to interim condensed consolidated financial statements.               

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Household International, Inc. and Subsidiaries                                  

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)        

1.   BASIS OF PRESENTATION                                                      
--------------------------                                                      
The accompanying unaudited condensed consolidated financial                     
statements of Household International, Inc. ("Household") and its               
subsidiaries have been prepared in accordance with generally                    
accepted accounting principles for interim financial information.               
Additionally, these financial statements have been prepared in                  
accordance with the instructions to Form 10-Q and Article 10 of                 
Regulation S-X. They do not include all of the information and                  
footnotes required by generally accepted accounting principles for              
complete financial statements. Certain prior period amounts have                
been reclassified to conform with the current period's                          
presentation. In the opinion of management, all adjustments                     
(consisting of normal recurring accruals) considered necessary for              
a fair presentation have been included. All share information is                
presented before giving effect to the previously announced                      
Household three-for-one stock split which is to be effected in the              
form of a stock dividend and is expected to be paid on or about                 
June 1, 1998. The stock split is pending stockholder approval to                
increase the number of authorized shares of Household common stock.             
Operating results for the three months ended March 31, 1998 should              
not be considered indicative of the results for any future quarters             
or the year ending December 31, 1998. Household and its                         
subsidiaries may also be referred to in this Form 10-Q as "we,"                 
"us" or "our." For further information, refer to the consolidated               
financial statements and footnotes included in our annual report on             
Form 10-K for the year ended December 31, 1997.                                 

2.   PENDING MERGER                                                             
-------------------                                                             
On April 7, 1998, we announced that we entered into a definitive                
agreement to combine Household with Beneficial Corporation                      
("Beneficial"), a consumer finance holding company headquartered in             
Wilmington, Delaware. The merger, which is expected to close in the             
third quarter of 1998, is subject to the approval of both                       
companies' shareholders, as well as certain regulatory authorities.             
Under the terms of the agreement, we will issue 1.0222 shares of                
our common stock for each outstanding share of Beneficial common                
stock. The merger will be accounted for as a pooling of interests.              
On March 31, 1998, Beneficial's total assets were $16.6 billion and             
shareholders' equity was  $2.0 billion.                                         

In connection with the merger, we expect to incur pre-tax merger                
and integration related costs of approximately $1 billion. These                
costs include lease exit costs and related fixed assets impairment,             
severance and change in control payments, asset write downs to                  
reflect modified business plans, legal and investment banking fees,             
and prepayment premiums related to debt.                                        

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3.   INVESTMENT SECURITIES                                                      
--------------------------                                                      
Investment securities consisted of the following:                               

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------
In millions.                                    March 31, 1998             December 31, 1997
--------------------------------------------------------------------------------------------
                                       Amortized          Fair       Amortized          Fair
                                            Cost         Value            Cost         Value
--------------------------------------------------------------------------------------------
                                                                                            
AVAILABLE-FOR-SALE INVESTMENTS                                                              
Marketable equity securities            $  127.8      $  129.9        $  128.4      $  131.9
Corporate debt securities                1,193.9       1,204.6         1,238.3       1,251.6
U.S. government and federal                                                                 
  agency debt securities                   209.4         208.4           232.1         220.4
Other                                    1,053.4       1,053.4           653.1         653.1
                                        --------      --------        --------      --------
Subtotal                                 2,584.5       2,596.3         2,251.9       2,257.0
Accrued investment income                   29.2          29.2            28.6          28.6
                                        --------      --------        --------      --------
Total investment securities             $2,613.7      $2,625.5        $2,280.5      $2,285.6
                                        ========      ========        ========      ========

4.  RECEIVABLES                                                                 
---------------                                                                 
Receivables consisted of the following:                                         

                                                                [Download Table]

------------------------------------------------------------------------------ 
                                                 March 31,        December 31, 
In millions.                                          1998                1997 
------------------------------------------------------------------------------ 
                                                                               
First mortgage                                   $   357.6           $   396.6 
Home equity                                        8,627.8             7,933.2 
Auto finance                                         654.4               487.5 
MasterCard/Visa                                    6,503.9             5,927.3 
Private label                                      4,653.1             4,682.9 
Other unsecured                                    4,163.7             3,609.3 
Commercial                                           683.8               774.2 
                                                 ---------           --------- 
Total owned receivables                           25,644.3            23,811.0 

Accrued finance charges                              388.5               377.5 
Credit loss reserve for owned receivables         (1,171.3)           (1,082.2)
Unearned credit insurance premiums and                                         
  claims reserves                                   (233.2)             (228.4)
Amounts due and deferred from                                                  
  receivables sales                                1,873.0             1,847.1 
Reserve for receivables serviced with                                          
  limited recourse                                  (829.2)             (862.3)
                                                 ---------           --------- 
Total owned receivables, net                      25,672.1            23,862.7 
Receivables serviced with limited recourse        20,696.4            21,565.8 
                                                 ---------           --------- 
Total managed receivables, net                   $46,368.5           $45,428.5 
                                                 =========           ========= 

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The outstanding balance of receivables serviced with limited                    
recourse consisted of the following:                                            

                                                                [Download Table]

----------------------------------------------------------------------
                                         March 31,        December 31,
In millions.                                  1998                1997
----------------------------------------------------------------------
                                                                      
Home equity                              $ 2,825.4           $ 3,125.9
Auto finance                                 348.0               395.9
MasterCard/Visa                           11,819.6            12,337.0
Private label                                986.2             1,025.0
Other unsecured                            4,717.2             4,682.0
                                         ---------           ---------
Total                                    $20,696.4           $21,565.8
                                         =========           =========

The combination of receivables owned and receivables serviced with limited      
recourse, which we consider our managed portfolio, is shown below:              

                                                                [Download Table]

----------------------------------------------------------------------
                                         March 31,        December 31,
In millions.                                  1998                1997
----------------------------------------------------------------------
                                                                      
First mortgage                           $   357.6           $   396.6
Home equity                               11,453.2            11,059.1
Auto finance                               1,002.4               883.4
MasterCard/Visa                           18,323.5            18,264.3
Private label                              5,639.3             5,707.9
Other unsecured                            8,880.9             8,291.3
Commercial                                   683.8               774.2
                                         ---------           ---------
Total                                    $46,340.7           $45,376.8
                                         =========           =========

The amounts due and deferred from receivables sales were $1,873.0               
million at March 31, 1998 and $1,847.1 million at December 31,                  
1997. The amounts due and deferred included unamortized                         
securitization assets and funds set up under the recourse                       
requirements for certain sales totaling $1,761.3 million at March               
31, 1998 and $1,716.2 million at December 31, 1997. It also                     
included customer payments not yet sent to us by the securitization             
trustee of $92.3 million at March 31, 1998 and $107.2 million at                
December 31, 1997. In addition, we have subordinated interests in               
certain transactions, which were recorded as receivables, of                    
$1,107.8 million at March 31, 1998 and $1,098.1 million at December             
31, 1997. We have agreements with a "AAA"-rated third party who                 
will insure us for up to $21.2 million in losses relating to                    
certain securitization transactions. We maintain credit loss                    
reserves under the recourse requirements for receivables serviced               
with limited recourse which are based on estimated probable losses              
under those requirements. The reserves totaled $829.2 million at                
March 31, 1998 and $862.3 million at December 31, 1997 and                      
represents our best estimate of probable losses on receivables                  
serviced with limited recourse.                                                 

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5.   CREDIT LOSS RESERVES                                                       
-------------------------                                                       
An analysis of credit loss reserves for the three months ended March 31 was     
as follows:                                                                     

                                                                [Download Table]

------------------------------------------------------------------------------ 
In millions.                                               1998           1997 
------------------------------------------------------------------------------ 
                                                                               
Credit loss reserves for owned receivables                                     
  at January 1                                         $1,082.2       $  900.2 
Provision for credit losses                               261.5          293.4 
Chargeoffs                                               (279.1)        (263.2)
Recoveries                                                 29.0           27.4 
Portfolio acquisitions, net                                77.7          (13.9)
                                                       --------       -------- 
TOTAL CREDIT LOSS RESERVES FOR OWNED RECEIVABLES                               
  AT MARCH 31                                           1,171.3          943.9 
                                                       --------       -------- 

Credit loss reserves for receivables serviced with                             
  limited recourse at January 1                           862.3          696.0 
Provision for credit losses                               261.5          249.1 
Chargeoffs                                               (314.0)        (204.3)
Recoveries                                                 18.8            9.9 
Other, net                                                   .6            2.6 
                                                       --------       -------- 
TOTAL CREDIT LOSS RESERVES FOR RECEIVABLES SERVICED                            
  WITH LIMITED RECOURSE AT MARCH 31                       829.2          753.3 
                                                       --------       -------- 
TOTAL CREDIT LOSS RESERVES FOR MANAGED RECEIVABLES                             
  AT MARCH 31                                          $2,000.5       $1,697.2 
                                                       ========       ======== 

6.   INCOME TAXES                                                               
-----------------                                                               
The effective tax rate was 32.7 percent for the three months ended              
March 31, 1998 and 34.4 percent in the year-ago period. The                     
effective tax rate differs from the statutory federal income tax                
rate in these years primarily because of the effects of (a)                     
amortization and write-offs of intangible assets, (b) state and                 
local income taxes, (c) reduction of noncurrent tax requirements                
and (d) leveraged lease tax benefits.                                           

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7.   EARNINGS PER COMMON SHARE                                                  
------------------------------                                                  
Computations of earnings per common share for the three months                  
ended March 31 were as follows:                                                 

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------               
                                                          1998                          1997 
                                        ----------------------        ---------------------- 
In millions, except per share data.     Diluted          Basic        Diluted          Basic 
------------------------------------    -------          -----        -------         ------ 
                                                                                             
Earnings:                                                                                    
  Net income                             $170.3         $170.3         $131.5         $131.5 
  Preferred dividends                      (2.9)          (2.9)          (3.2)          (3.2)
                                         ------         ------         ------         ------ 
Earnings available to common                                                                 
  shareholders                           $167.4         $167.4         $128.3         $128.3 
                                         ======         ======         ======         ====== 
Average shares:                                                                              
  Common                                  107.2          107.2           97.2           97.2 
  Common equivalents                        1.5            -              1.4            -   
                                         ------         ------         ------         ------ 
Total                                     108.7          107.2           98.6           97.2 
                                         ======         ======         ======         ====== 
Earnings per common share                $ 1.54         $ 1.56         $ 1.30         $ 1.32 
                                         ======         ======         ======         ====== 

On March 10, 1998, our Board of Directors declared a three-for-one              
common stock split, to be effected in the form of a stock dividend,             
subject to shareholders approving an increase in common shares at               
the Annual Meeting of Shareholders on May 13, 1998. If approved,                
shareholders of record as of May 14, 1998 will be issued new shares             
on or about June 1, 1998. All share information is presented before             
giving effect to the previously announced stock split.                          

8.   COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES              
OF SUBSIDIARY TRUSTS                                                  
------------------------------------------------------------------              
In March 1998 Household Capital Trust IV ("HCT IV"), a wholly-owned             
subsidiary of Household, issued 8 million 7.25 percent Trust                    
Preferred Securities ("preferred securities") at $25 per preferred              
security. The sole asset of HCT IV is $206.2 million of 7.25                    
percent Junior Subordinated Deferrable Interest Notes issued by                 
Household. The junior subordinated notes held by HCT IV mature on               
December 31, 2037 and are redeemable by Household in whole or in                
part beginning on March 19, 2003, at which time the HCT IV                      
preferred securities are callable at par of $25 per preferred                   
security plus accrued and unpaid dividends. Net proceeds from the               
issuance of preferred securities were used for general corporate                
purposes.                                                                       

In June 1996 Household Capital Trust II ("HCT II"), a wholly-owned              
subsidiary of Household, issued 4 million 8.70 percent preferred                
securities at $25 per preferred security. The sole asset of HCT II              
is $103.1 million of 8.70 percent Junior Subordinated Deferrable                
Interest Notes issued by Household. The junior subordinated notes               
held by HCT II mature on June 30, 2036 and are redeemable by                    
Household in whole or in part beginning on June 30, 2001, at which              
time the HCT II preferred securities are callable at par value of               
$25 per preferred security plus accrued and unpaid dividends.                   

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In 1995 Household Capital Trust I ("HCT I"), a wholly-owned                     
subsidiary of Household, issued 3 million 8.25 percent preferred                
securities at $25 per preferred security. The sole asset of HCT I               
is $77.3 million of 8.25 percent Junior Subordinated Deferrable                 
Interest Notes issued by Household. The junior subordinated notes               
held by HCT I mature on June 30, 2025 and are redeemable by                     
Household in whole or in part beginning June 30, 2000, at which                 
time the HCT I preferred securities are callable at par value of                
$25 per preferred security plus accrued and unpaid dividends. HCT I             
may elect to extend the maturity of its preferred securities to                 
June 30, 2044.                                                                  

The obligations of Household with respect to the junior                         
subordinated notes, when considered together with certain                       
undertakings of Household with respect to HCT I, HCT II and HCT IV,             
constitute full and unconditional guarantees by Household of HCT                
I's, HCT II's and HCT IV's obligations under the respective                     
preferred securities. The preferred securities are classified in                
our balance sheets as company obligated mandatorily redeemable                  
preferred securities of subsidiary trusts (representing the                     
minority interest in the trusts) at their face and redemption                   
amount of $375 million at March 31, 1998 and $175 million at                    
December 31, 1997. The preferred securities have a liquidation                  
value of $25 per preferred security. Dividends on the preferred                 
securities are cumulative, payable quarterly in arrears, and are                
deferrable at Household's option for up to five years from date of              
issuance. Household cannot pay dividends on its preferred and                   
common stocks during such deferments.                                           

9.  COMPREHENSIVE INCOME                                                        
------------------------                                                        
In June 1997, the Financial Accounting Standards Board issued                   
Statement of Financial Accounting Standards No. 130, "Reporting                 
Comprehensive Income" ("FAS No. 130"), effective for fiscal years               
beginning after December 15, 1997. This statement establishes                   
standards for the reporting and presentation of comprehensive                   
income. Comprehensive income, in addition to traditional net                    
income, includes the mark-to-market adjustments on available-for-               
sale securities, cumulative translation adjustments and other items             
which represent a change in equity from "nonowner" sources. FAS No.             
130 does not change existing requirements for certain items to be               
reported as a separate component of shareholders' equity. In                    
accordance with the interim reporting guidelines of FAS No. 130,                
comprehensive income was $173.5 million for the quarter ended March             
31, 1998 and $105.6 million for the quarter ended March 31, 1997.               

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Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION            
AND RESULTS OF OPERATIONS                                     

This Form 10-Q contains certain estimates and projections regarding             
Household and our proposed merger with Beneficial Corporation, that             
may be forward-looking in nature, as defined by the Private                     
Securities Litigation Reform Act of 1995. A variety of factors may              
cause actual results to differ materially from the results                      
discussed in these forward-looking statements. Factors that might               
cause such a difference are discussed herein and in Household                   
International's and Beneficial Corporation's Annual Reports on                  
Forms 10-K, for the year ended December 31, 1997, filed with the                
Securities and Exchange Commission.                                             

OPERATIONS SUMMARY                                                              
------------------                                                              
Our net income for the first quarter of 1998 was $170.3 million, up             
30 percent from $131.5 million in 1997. Diluted earnings per share              
was $1.54 for the first quarter of 1998, up 18 percent from $1.30               
per share in 1997. Basic earnings per share, which excludes the                 
impact of common stock equivalents, was $1.56 for the first quarter             
of 1998 compared to $1.32 in 1997. The difference between the                   
percentage increases in net income and earnings per share for the               
first quarter was because we issued over nine million common shares             
in June 1997. Our annualized return on average common shareholders'             
equity for the first quarter of 1998 was 14.7 percent, compared to              
17.1 percent in the year-ago period. This decrease in 1998 reflects             
the increase in average equity from the June common stock offering.             
Our annualized return on average owned assets improved to 2.14                  
percent in the 1998 first quarter from 1.77 percent a year ago.                 

- The following summarizes our operating results for our key                    
businesses for the first quarter of 1998 compared to the prior              
year period:                                                                

Results for our domestic consumer finance business improved from            
the prior year period reflecting higher net interest margin and             
fee income due mainly to higher levels of average managed                   
receivables. These improvements were partially offset by higher             
credit losses resulting primarily from increased personal                   
bankruptcy filings.                                                         

Our MasterCard* and Visa* credit card business reported lower               
net interest margin partially offset by higher fee income and               
improved operating efficiency. This business includes our co-               
branding and affinity relationship strategies, in particular our            
alliance with General Motors Corporation ("GM") to issue the GM             
Card, a co-branded credit card, and the AFL-CIO's Union                     
Privilege affinity relationship.                                            

Our private label credit card business reported higher credit               
losses, partially offset by higher net interest margin and fee              
income, and improved efficiency. Higher credit losses reflected             
higher personal bankruptcies as well as the maturing of                     
promotional balances in the first quarter of 1998.                          

Net income increased in our United Kingdom ("U.K.") operation               
primarily due to improved efficiency, as well as higher                     
interchange income and insurance premiums, due to receivables               
growth. The Goldfish Card, issued in alliance with the Centrica             
Group, contributed significantly to the growth in credit card               
receivables during the quarter.                                             

* MasterCard is a registered trademark of MasterCard                            
International, Incorporated and Visa is a registered trademark              
of VISA USA, Inc.                                                           

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- Our normalized managed basis efficiency ratio improved to 35.6                
percent for the first quarter of 1998 compared to 38.3 percent a            
year ago. The efficiency ratio is the ratio of operating                    
expenses to the sum of our managed net interest margin and other            
revenues less policyholders' benefits. We normalize, or adjust              
for, items that are not indicative of ongoing operations. They              
include gains on the sales of loan portfolios and non-recurring             
restructuring expenses. The improvement in the managed ratio in             
1998 resulted from growth in normalized managed net revenues                
over the prior year, compared to essentially no change in                   
normalized operating expenses over the comparable period.                   

- We continued to increase our credit loss reserves during the                  
first three months of 1998 due to the maturing of our unsecured             
loan portfolios and continued high levels of personal bankruptcies.         

- On March 10, 1998, our Board of Directors declared a three-for-               
one common stock split, to be effected in the form of a stock               
dividend, subject to shareholders approving an increase in                  
common shares at the Annual Meeting of Shareholders on May 13,              
1998. If approved, shareholders of record as of May 14, 1998                
will be issued new shares on or about June 1, 1998. All share               
information is presented before giving effect to the previously             
announced stock split.                                                      

- On April 7, 1998, we announced that we entered into a definitive              
agreement to combine Household with Beneficial Corporation                  
("Beneficial"), a consumer finance holding company headquartered            
in Wilmington, Delaware. The merger, which is expected to close             
in the third quarter of 1998, is subject to the approval of both            
companies' shareholders, as well as certain regulatory                      
authorities. Under the terms of the agreement, we will issue                
1.0222 shares of our common stock for each outstanding share of             
Beneficial common stock. The merger will be accounted for as a              
pooling of interests. On March 31, 1998, Beneficial's total                 
assets were $16.6 billion and shareholders' equity was $2.0                 
billion.                                                                    

In connection with the merger, we expect to incur pre-tax merger            
and integration related costs of approximately $1 billion. These            
costs include lease exit costs and related fixed assets                     
impairment, severance and change in control payments, asset                 
write downs to reflect modified business plans, legal and                   
investment banking fees, and prepayment premiums related to                 
debt.                                                                       

BALANCE SHEET REVIEW                                                            
--------------------                                                            
- Managed consumer receivables (receivables on our balance sheet                
plus receivables serviced with limited recourse) grew 12 percent            
over the prior year. Core products, which exclude first mortgages           
and commercial receivables, increased 13 percent from a year ago.           
Growth in home equity loans and auto finance receivables reflect            
the acquisitions of Transamerica Financial Services Holding Company         
("TFS") in June 1997 and ACC Consumer Finance Corporation ("ACC")           
in October 1997. Additionally, new loan originations in our retail          
branch network were up 30 percent from the prior year.  However,            
the higher level of refinancings continued to impact home equity            
loan growth. MasterCard and Visa receivables were up from a year            
ago due to solid growth in our U.K. bankcard business and the               
purchase of a $925 million portfolio late in the quarter. This              
growth was offset by the non-strategic portfolio sales which                
occurred in the second half of 1997. Other unsecured receivables            
were up slightly compared to the prior year reflecting the purchase         
of an $850 million portfolio in the quarter. In addition, other             
unsecured growth was affected by the sale of our student loan               
portfolio in the fourth quarter of 1997 totaling about $900 million         
and our slowed origination of new unsecured business in recent              
quarters because of the uncertain credit environment.                       

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- Compared to the fourth quarter of 1997, core receivables were up              
primarily due to the acquisitions discussed above. This growth was          
partially offset, however, due to the normal, seasonal runoff               
experienced in the MasterCard and Visa portfolio and the slowing of         
new originations of other unsecured receivables as discussed above.         
New loan originations in our retail branch network were up 7                
percent in the quarter. However, the higher level of refinancings           
continued to impact home equity loan growth.                                

- Consumer receivables on our balance sheet were $25.0 billion                  
at March 31, 1998, up from $23.0 billion at December 31, 1997 and           
$21.5 billion at March 31, 1997. Changes in these owned receivables         
from period to period may vary depending on the timing and                  
significance of securitization transactions.                                

- Our managed credit loss reserves were $2,000.5 million at                     
March 31, 1998, up from $1,944.5 million at December 31, 1997 and           
$1,697.2 million at March 31, 1997. Credit loss reserves as a               
percent of managed receivables were 4.32 percent, up from 4.29              
percent at December 31, 1997 and 4.08 percent at March 31, 1997.            
Reserves as a percent of nonperforming managed receivables were             
116.1 percent, compared to 117.3 percent at December 31, 1997 and           
118.6 percent at March 31, 1997. Consumer two-months-and-over               
contractual delinquency ("delinquency") as a percent of managed             
consumer receivables was 4.79 percent, compared to 4.82 percent at          
December 31, 1997 and 4.45 percent at March 31, 1997. The                   
annualized total consumer managed chargeoff ratio in the first              
quarter of 1998 was 4.82 percent, compared to 4.50 percent in the           
prior quarter and 4.15 percent in the year-ago quarter.                     

- The ratio of total shareholders' equity (including company                    
obligated mandatorily redeemable preferred securities of subsidiary         
trusts) to total owned assets was 15.69 percent, compared to 15.98          
percent at December 31, 1997. The ratio of total shareholders'              
equity to managed assets was 9.63 percent, up from 9.33 percent at          
December 31, 1997.                                                          

LIQUIDITY AND CAPITAL RESOURCES                                                 
-------------------------------                                                 
Our subsidiaries use cash to originate loans, purchase loans or                 
investment securities or acquire businesses. Their main sources of              
cash are the collection and securitization of receivable balances;              
maturities or sales of investment securities; proceeds from the                 
issuance of debt and deposits; and cash provided by operations.                 

The following describes major changes in our funding base from                  
December 31, 1997 to March 31, 1998:                                            

- In March 1998, a subsidiary issued $200 million of company                    
obligated mandatorily redeemable preferred securities of subsidiary         
trust (representing the minority interest in the subsidiary).               

- Commercial paper, bank and other borrowings increased 11                      
percent from $6.1 billion to $6.8 billion. Senior and senior                
subordinated debt (with original maturities over one year)                  
increased 10 percent from $14.8 billion to $16.3 billion. The               
increase in debt levels from year end is primarily attributable to          
the increase in owned receivables.                                          

- Our securitized portfolio of home equity, auto finance,                       
MasterCard and Visa, private label and other unsecured receivables          
totaled $20.7 billion at March 31, 1998, compared to $21.6 billion          
at December 31, 1997. In the first quarter of 1998, we securitized,         
excluding replenishments of certificate holder interests, $.3               
billion of other unsecured receivables, compared to $2.0 billion of         
MasterCard and Visa and other unsecured receivables a year ago.             

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The composition of these securitizations by type is as follows                  
(in billions):                                                                  

                                                                [Download Table]

--------------------------------------------------------------
                                        March 31,    March 31,
Three months ended                           1998         1997
--------------------------------------------------------------
                                                              
MasterCard/Visa                              $  -        $ 1.2
Other unsecured                                .3           .8
                                             ----        -----
Total                                        $ .3        $ 2.0
                                             ====        =====

The market for securities backed by receivables is a reliable,                  
efficient and cost-effective source of funds, which we plan to                  
continue to utilize in the future.                                              

PRO FORMA MANAGED STATEMENTS OF INCOME                                          
--------------------------------------                                          
Securitizations of consumer receivables have been, and will                     
continue to be, an important source of funding. We continue to                  
service securitized receivables after they have been sold and                   
retain a limited recourse liability for future credit losses. We                
include revenues and credit-related expenses related to the off-                
balance sheet portfolio in one line item in our owned statements of             
income. Specifically, we report net interest margin, fee and other              
income, and provision for credit losses for securitized receivables             
as a net amount in securitization income.                                       

We monitor our operations on a managed basis as well as on the                  
owned basis shown in our statements of income. The managed basis                
assumes that the securitized receivables have not been sold and are             
still on our balance sheet. The income and expense items discussed              
above are reclassified from securitization income into the                      
appropriate caption. Pro forma managed statements of income, which              
reflect these reclassifications, are presented below. For purposes              
of this analysis, the managed results do not reflect the                        
differences between our accounting policies for owned receivables               
and the off-balance sheet portfolio. Therefore, net income on a pro             
forma managed basis equals net income on an owned basis.                        

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Pro Forma Managed Statements of Income                                          

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------- 
All dollar amounts are stated in                                                       
millions.                                                                              
Three months ended March 31                    1998         *           1997         * 
-------------------------------------------------------------------------------------- 
                                                                                       
Finance income                            $ 1,584.1     13.79%     $ 1,414.7     13.52%
Other interest income                          12.3      6.19            8.3      5.76 
Interest expense                              717.1      6.10          638.1      5.97 
                                          ---------     -----      ---------     ----- 
Net interest margin                           879.3      7.48          784.9      7.35 
Provision for credit losses                   523.0                    542.5           
                                          ---------                ---------           
Net interest margin after                                                              
  provision for credit losses                 356.3                    242.4           
                                          ---------                ---------           
Insurance revenues                             74.5                     65.4           
Investment income                              29.6                     33.2           
Fee income                                    254.5                    267.1           
Other income                                   14.8                     69.1           
                                          ---------                ---------           
Total other revenues                          373.4                    434.8           
                                          ---------                ---------           
Salaries and fringe benefits                  165.2                    147.6           
Occupancy and equipment expense                54.5                     53.9           
Other marketing expenses                       81.1                     81.9           
Other servicing and administrative                                                     
  expenses                                     85.8                    109.4           
Amortization of acquired                                                               
  intangibles and goodwill                     42.4                     36.8           
Policyholders' benefits                        47.7                     47.0           
                                          ---------                ---------           
Total costs and expenses                      476.7                    476.6           
                                          ---------                ---------           
Income before taxes                           253.0                    200.6           
Income taxes                                   82.7                     69.1           
                                          ---------                ---------           
Net income                                $   170.3                $   131.5           
                                          =========                =========           
Average managed receivables               $45,946.2                $42,154.5           
Average noninsurance investments              794.8                    576.8           
Other interest earning assets                 270.3                      -             
                                          ---------                ---------           
Average managed interest-earning                                                       
  assets                                  $47,011.3                $42,731.3           
                                          =========                =========           

* As a percent, annualized, of appropriate earning assets.                      

The following discussion on revenues, where applicable, and                     
provision for credit losses includes comparisons to amounts                     
reported on our historical owned statements of income ("Owned                   
Basis"), as well as on the above pro forma managed statements of                
income ("Managed Basis").                                                       

Net interest margin                                                             
-------------------                                                             
Net interest margin on an Owned Basis was $395.0 million for the                
first quarter of 1998, compared to $394.8 million in the prior                  
year. Owned margin improved due to an increase in average owned                 
home equity loans as a result of the acquisition of TFS in 1997,                
but was offset by a decrease in average owned credit card and other             
unsecured receivables. Net interest margin on a Managed Basis was               
$879.3 million for the first quarter of 1998, up 12 percent                     
compared to the year-ago period. The increase was primarily due to              
an increase in average managed home equity loans resulting from the             
acquisition of TFS. Net interest margin as a percent of average                 
managed interest-earning assets, annualized, was 7.48 percent                   
compared to 7.35 percent in the year-ago quarter. The improvement               
was primarily due to the continuing change in product mix, improved             
pricing and lower leverage.                                                     

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Provision for credit losses                                                     
---------------------------                                                     
The provision for credit losses for receivables on an Owned Basis               
for the first quarter of 1998 totaled $261.5 million, compared to               
$293.4 million in the prior year period. The provision as a percent             
of average owned receivables, annualized, was 4.17 percent in the               
first quarter of 1998 compared to 5.07 percent in the first quarter             
of 1997. Owned provision in excess of owned chargeoffs was $11                  
million for the three months ended March 31, 1998 and $58 million               
for the three months ended March 31, 1997. We continued to record a             
provision for credit losses in excess of current period chargeoffs              
because of continued uncertainty regarding consumer payment                     
patterns, the continued high levels of personal bankruptcies and                
the maturing of our unsecured loan products. The maturing or                    
seasoning of a product is the effect of a growing portfolio                     
reaching expected levels of chargeoffs as loans age. The provision              
for credit losses on an Owned Basis may vary from quarter to                    
quarter, depending on the amount of securitizations in a particular             
period.                                                                         

The provision for credit losses for receivables on a Managed Basis              
totaled $523.0 million in the first quarter of 1998, compared to                
$542.5 million in the prior year period. As a percent of average                
managed receivables, annualized, the provision was 4.55 percent,                
compared to 5.15 percent in the first quarter of 1997. The Managed              
Basis provision includes the over-the-life reserve requirement on               
the off-balance sheet portfolio. This provision is impacted by the              
type and amount of receivables securitized in a given period and                
substantially offsets the income recorded on the securitization                 
transactions. The provision for our off-balance sheet portfolio in              
the quarter was less than chargeoffs because we securitized less                
this quarter and did not need to record as much over-the-life                   
provision. In the first quarter of 1998, we securitized                         
approximately $.3 billion of other unsecured receivables, compared              
to approximately $2.0 billion of MasterCard and Visa and other                  
unsecured receivables a year ago. See the credit quality section                
for further discussion of factors affecting the provision for                   
credit losses.                                                                  

Other revenues                                                                  
--------------                                                                  
Securitization income on an Owned Basis was $377.8 million for the              
three months ended March 31, 1998 and $330.7 million for the same               
period in 1997. Securitization income consists of income associated             
with the securitization and sale of receivables with limited                    
recourse, including net interest income, fee and other income and               
provision for credit losses related to those receivables. The 14                
percent increase in securitization income compared to the first                 
quarter of 1997 was primarily due to the increase in average                    
securitized receivables. The components of securitization income                
are reclassified to the appropriate caption in the statements of                
income on a Managed Basis.                                                      

Fee income on an Owned Basis includes revenues from fee-based                   
products such as credit cards. Fee income was $99.5 million in the              
first quarter of 1998, up from $77.4 million in the comparable                  
period of the prior year. The increase in fee income in 1998                    
reflected higher credit card fees as compared to the prior year                 
quarter.                                                                        

Fee income on a Managed Basis, which in addition to the items                   
discussed above, includes fees and other income related to the off-             
balance sheet portfolio. Managed Basis fee income was $254.5                    
million in the first quarter of 1998 compared to $267.1 million in              
1997. The decrease was primarily due to lower securitization                    
activity offset somewhat by higher credit card fees as compared to              
the prior year.                                                                 

Other income was $14.8 million in the first quarter of 1998, down               
from $69.1 million in 1997. Other income in 1997 included                       
approximately $50 million of non-recurring gains on the sales of                
certain non-strategic assets during the prior year quarter.                     

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Expenses                                                                        
--------                                                                        
Operating expenses for the first quarter of 1998 were $429.0                    
million, essentially unchanged from $429.6 million in the                       
comparable prior year period reflecting our overall expense control             
efforts.                                                                        

Salaries and fringe benefits were $165.2 million compared to $147.6             
million in the first quarter of 1997. The higher expense was                    
primarily due to an increase in employees in our domestic consumer              
finance and auto finance businesses in connection with our                      
acquisitions of TFS in June 1997 and ACC in October 1997.                       

Other servicing and administrative expenses were $85.8 million in               
the first quarter of 1998, down from $109.4 million in the prior                
year. The decrease was primarily due to reductions in fraud losses              
and lower real estate owned costs.                                              

Amortization of acquired intangibles and goodwill was $42.4 million             
in the first quarter of 1998, up from $36.8 million in the prior                
year period.  The increase reflects our acquisitions of TFS and ACC             
in 1997.                                                                        

CREDIT LOSS RESERVES                                                            
--------------------                                                            
Our consumer credit management policies focus on product type and               
specific portfolio risk factors. The consumer credit portfolio is               
diversified by product and geographic location. See Note 4,                     
"Receivables" in the accompanying financial statements for                      
receivables by product type.                                                    

Total managed credit loss reserves, which include reserves                      
established on the off-balance sheet portfolio when receivables are             
securitized, were as follows (in millions):                                     

                                                                [Download Table]

------------------------------------------------------------------------------------
                                            March 31,     December 31,     March 31,
                                                 1998             1997          1997
------------------------------------------------------------------------------------
                                                                                    
Owned                                        $1,171.3         $1,082.2      $  943.9
Serviced with limited recourse                  829.2            862.3         753.3
                                             --------         --------      --------
Total                                        $2,000.5         $1,944.5      $1,697.2
                                             ========         ========      ========

We have increased total managed credit loss reserves from the prior             
quarters due to seasoning of unsecured loan portfolios and                      
uncertainty resulting from continued high levels of personal                    
bankruptcies. Managed credit loss reserves as a percent of                      
nonperforming managed receivables were 116.1 percent, compared to               
117.3 percent at December 31, 1997 and 118.6 percent at March 31,               
1997.                                                                           

Total owned and managed credit loss reserves as a percent of                    
receivables were as follows:                                                    

                                                                [Download Table]

-------------------------------------------------------------- 
                        March 31,    December 31,    March 31, 
                             1998            1997         1997 
-------------------------------------------------------------- 
                                                               
Owned                        4.57%           4.54%        4.21%
Managed                      4.32            4.29         4.08 
                             ----            ----         ---- 

The level of reserves for consumer credit losses is based on                    
delinquency and chargeoff experience by product and judgmental                  
factors.  We also evaluate the potential impact of existing and                 
anticipated national and regional economic conditions on the                    
managed receivable portfolio when establishing credit loss                      
reserves.  See  Note 5, "Credit Loss Reserves" in the accompanying              
financial statements for analyses of reserves.                                  

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CREDIT QUALITY                                                                  
--------------                                                                  
Delinquency and chargeoff statistics reflect the impact of the                  
portfolio acquisitions during the quarter. Delinquency levels in                
the consumer portfolio were down slightly compared to the prior                 
quarter, but were higher than the first quarter of 1997. Chargeoffs             
were up compared to the prior and year-ago quarters.  We track                  
delinquency and chargeoff levels on a managed basis.  We include the            
off-balance sheet portfolio since we apply the same credit and                  
portfolio management procedures as on our owned portfolio.  This                
results in a similar credit loss exposure for us.                               

Delinquency                                                                     
-----------                                                                     
Two-Months-and-Over Contractual Delinquency (as a percent of                    
managed consumer receivables):                                                  

                                                        [Enlarge/Download Table]

----------------------------------------------------------------------------------------------- 
                           3/31/98       12/31/97         9/30/97       6/30/97         3/31/97 
----------------------------------------------------------------------------------------------- 
                                                                                                
First mortgage                9.33%         10.35%           9.27%        10.27%           8.19%
Home equity                   4.07           4.17            3.41          3.18            3.85 
Auto finance <F1>             1.84           2.09              -             -               -  
MasterCard/Visa               3.02           3.05            3.17          3.10            3.13 
Private label                 6.89           6.75            6.54          5.89            5.52 
Other unsecured               8.19           8.30            7.28          6.77            6.68 
                              ----          -----            ----         -----            ---- 
Total                         4.79%          4.82%           4.62%         4.32%           4.45%
                              ====          =====            ====         =====            ==== 
<FN>                                                                                            
<F1> Prior to the fourth quarter of 1997, delinquency statistics for auto                       
     finance receivables were not significant.  For prior periods,                              
     delinquency data for these receivables were included in other                              
     unsecured receivables.                                                                     
</FN>                                                                                           

Delinquency as a percent of managed consumer receivables decreased              
from the prior quarter but increased from the prior year quarter.               
The decrease from the prior quarter was primarily due to a decrease             
in dollars of delinquency in the MasterCard and Visa portfolio.                 

The increase in the managed delinquency ratio from a year ago was               
due to seasoning of the home equity and other unsecured portfolios              
and the maturing of certain special promotional balances in our                 
private label portfolio.  Dollars of delinquency in the first                   
mortgage portfolio were down as this portfolio continued to                     
liquidate.                                                                      

Net Chargeoffs of Consumer Receivables                                          
--------------------------------------                                          
Net Chargeoffs of Consumer Receivables (as a percent, annualized,               
of average managed consumer receivables):                                       

                                                        [Enlarge/Download Table]

---------------------------------------------------------------------------------------------- 
                             First         Fourth          Third          Second         First 
                           Quarter        Quarter        Quarter         Quarter       Quarter 
                              1998           1997           1997            1997          1997 
---------------------------------------------------------------------------------------------- 
                                                                                               
First mortgage                 .81%          1.29%          1.21%            .87%          .94%
Home equity                    .92            .80            .77            1.17          1.38 
Auto finance <F1>             5.94           5.31             -               -             -  
MasterCard/Visa               5.96           5.74           6.42            5.84          4.90 
Private label                 6.42           5.39           4.99            4.63          4.85 
Other unsecured               6.46           6.18           5.93            5.41          4.97 
                              ----           ----           ----            ----          ---- 
Total                         4.82%          4.50%          4.63%           4.58%         4.15%
                              ====           ====           ====            ====          ==== 
<FN>                                                                                           
<F1>  Prior to the fourth quarter of 1997, chargeoff statistics for                            
      auto finance receivables were not significant and were included                          
      in other unsecured receivables.                                                          
</FN>                                                                                          

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Net chargeoffs as a percent of average managed consumer receivables             
for the first quarter of 1998 increased compared to both the prior              
and year-ago periods.  The increase in chargeoffs in the  auto finance          
portfolio was primarily due to seasonality in the auto industry.                
The MasterCard and Visa net chargeoff ratio increased from the prior            
quarter due to lower recoveries.  Beginning in the first quarter of             
1998, a greater number of charged off receivables are being collected           
internally rather than sold to an external third party.  Because these          
accounts are retained by us, recoveries will be recorded when the cash          
is actually collected.  Gross chargeoff dollars in our MasterCard and           
Visa portfolio were essentially flat in the quarter, and chargeoff              
dollars due to bankruptcies declined compared to the fourth quarter level.      
Chargeoffs in the private label portfolio increased due to higher levels        
of personal bankruptcies as well as the maturing of certain special             
promotional balances.  These balances were mainly associated with               
longer-term promotional programs which we have de-emphasized.                   
The increase in other unsecured was attributable to higher                      
bankruptcy chargeoffs and continued seasoning of this portfolio.                

The increase in the chargeoff ratio compared to a year ago was primarily        
due to increased bankruptcy filings in the MasterCard and Visa portfolio        
and lower recoveries in this portfolio as discussed above.  Also                
contributing to the increase in the chargeoff ratio was the continued           
seasoning of the private label and other unsecured portfolios.                  

Nonperforming Assets                                                            
--------------------                                                            
Nonperforming assets consisted of the following:                                

                                                        [Enlarge/Download Table]

----------------------------------------------------------------------------------------------------- 
In millions.                       3/31/98      12/31/97        9/30/97         6/30/97       3/31/97 
----------------------------------------------------------------------------------------------------- 
                                                                                                      
Nonaccrual managed                                                                                    
  receivables                     $1,032.0      $  973.5       $  894.3        $  865.0      $  820.1 
Accruing managed consumer                                                                             
  receivables 90 or more days                                                                         
  delinquent                         678.1         672.0          634.7           616.3         598.5 
Renegotiated commercial                                                                               
  loans                               12.3          12.4           12.9            12.9          12.9 
                                  --------      --------       --------        --------      -------- 
Total nonperforming managed                                                                           
  receivables                      1,722.4       1,657.9        1,541.9         1,494.2       1,431.5 
Real estate owned                    139.6         127.3          150.5           149.4         152.6 
                                  --------      --------       --------        --------      -------- 
Total nonperforming assets        $1,862.0      $1,785.2       $1,692.4        $1,643.6      $1,584.1 
                                  ========      ========       ========        ========      ======== 
Managed credit loss reserves as                                                                       
  a percent of nonperforming                                                                          
  managed receivables                116.1%        117.3%         117.3%          118.5%        118.6%
                                  --------      --------       --------        --------      -------- 


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PART II.  OTHER INFORMATION                                                     

Item 6.   Exhibits and Reports on Form 8-K                                      

(a)  Exhibits                                                               

12      Statement of Computation of Ratio of Earnings to Fixed    
 Charges and to Combined Fixed Charges and Preferred
Stock Dividends.                                  

21      List of Household International subsidiaries.             

27      Financial Data Schedule.                                  

99.1    Debt and Preferred Stock Securities Ratings.              

(b)  Reports on Form 8-K                                                    

During the first quarter of 1998, the Registrant filed a Current  
Report on Form 8-K dated January 21, 1998 with respect to the     
financial results of Household International, Inc., for the       
quarter and year ended December 31, 1997, and a Current Report    
on Form 8-K dated March 6, 1998 containing the audited financial  
  statements with respect to the operations of Household International
and its subsidiaries, as of and for the years ended December 31,  
1997, 1996 and 1995, and announced its interest in exploring a    
strategic opportunity with Beneficial Corporation.                

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SIGNATURE             
---------             
Pursuant to the requirements of the Securities Exchange Act of                  
1934, the registrant has duly caused this report to be signed on                
its behalf by the undersigned thereunto duly authorized.                        

         HOUSEHOLD INTERNATIONAL, INC.
         -----------------------------
(Registrant)        

Date:  May 12, 1998           By: /s/ David A. Schoenholz                       
------------           -----------------------------              
David A. Schoenholz 
      Executive Vice President -
   Chief Financial Officer
and on behalf of    
         Household International, Inc.

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Exhibit Index             
-------------             

12      Statement of Computation of Ratio of Earnings             
to Fixed Charges and to Combined Fixed Charges and
Preferred Stock Dividends.                        

21      List of Household International subsidiaries.             

27      Financial Data Schedule.                                  

99.1    Debt and Preferred Stock Securities Ratings.

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	12/31/37	4	11
	6/30/36	4	11
	6/30/25	4	12
	3/19/03	11		10-K/A, 425, 8-K, DEFA14A
	6/30/01	11		10-Q, 8-K
	6/30/00	12		10-Q
	12/31/98	7		10-K
	6/1/98	7	14	S-4
	5/14/98	11	14
	5/13/98	11	14	DEF 14A
Filed on:	5/12/98	23
	4/30/98	1
	4/7/98	7	14
For Period End:	3/31/98	1	18	DEF 14A
	3/10/98	11	14
	3/6/98	22		8-K, S-3/A
	1/21/98	22		8-K
	12/31/97	4	22	10-K405
	12/15/97	12
	3/31/97	2	19	10-Q
	12/31/96	22		10-K405
	12/31/95	22		10-K
				List all Filings

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Filing Submission 0000354964-98-000015 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

HSBC Finance Corp – ‘10-Q’ for 3/31/98

As of: Tuesday, 5/12/98 · For: 3/31/98 · Accession #: 354964-98-15 · File #: 1-08198

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