The UK's largest bank HSBC is expected to unveil about $16bn of losses for 2007, but will still make an annual profit, reports suggest.
The firm's annual results out on Monday will show that the bad debt charge is mostly related to the crumbling US housing market and consumer blues. ( BBC )
But it is still thought profits will rise to $25bn, from $22bn the year before and it will raise its dividend.
UK banks have so fared better than their US rivals in the credit crisis.
HSBC is the last of the "big five" British banks to report its earnings for 2007.
Barclays, Royal Bank of Scotland (RBS), Lloyds TSB and HBOS, which was formed by the merger of Halifax and Bank of Scotland, have already filed their figures.
Together with a number of smaller High Street lenders, they have made a collective loss of about ?5bn on the declining value of investments linked to the US sub-prime mortgage crisis before factoring in potential losses at HSBC, according to The Observer.
HSBC's $16bn bad debt writedown, forecast in reports in most of the Sunday newspapers, would be two thirds greater than the $10.6bn impairment provision for 2006.
The scale of the losses is expected to increase pressure on the bank's management from activist shareholders to overhaul its policy with regard to its troubled US arm HSBC Finance Corporation (HFC).
Knight Vinke Asset Management is pressing HSBC's chairman Stephen Green to sever ties with HFC and thus ditch all its exposure to struggling US housebuyers, according to reports in The Sunday Times and The Sunday Telegraph.
The investment group wants HSBC to focus on growing markets in Asia.
In line with its demands, the banking giant sold its French regional banking subsidiaries, which had 400 branches, for $3.2bn last week.
HSBC is expected to reassure investors that its future is brighter by lifting its dividend payout to shareholders by 10% in line with its UK peers.
Analysts believe higher dividends suggest banks feel they are over the worst of the problems in the US housing market, which has been battered by record mortgage defaults, falling house prices and increased borrowing costs.
But there are fears that HSBC's troubles are spreading beyond its US mortgage business with US consumers struggling to repay credit card bills and personal loans.