HSBC Holdings PLC's troubled U.S. consumer lending division continued to drag down Europe's largest banking company in the first quarter, though charges for soured loans were lower than expected.

HSBC Finance Corp. booked a $3.9 billion impairment charge on bad loans in the quarter, down from a $4.6 billion impairment charge in the fourth quarter and much less than the $5 billion charge some analysts were expecting.

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