Many homeowners continue to struggle to make payments on their mortgages as Bermuda grinds through what has been described as its deepest credit crisis in at least half a century.

Financial results released by HSBC Bank Bermuda Ltd yesterday revealed the scale of the problem. Impaired or non-performing loans — described as 90 days or more past due — made up 17.4 per cent of the bank’s $3.06 billion in total loans and advances, an improvement from the 20.7 per cent reported last year.

The bank’s consolidated financial statements for 2014 show that the bulk of the problem is with mortgages.

The breakdown shows that 26 per cent of loans bearing mortgage interest are impaired. These loans are worth $497.8 million of the bank’s $1.87 billion of total mortgages.

In an interview yesterday, HSBC Bermuda executives stressed that they were working hard to keep people in their homes.

Chief financial officer Michael Schrum said: “Bermuda is going through a very, very deep credit cycle. Certainly in the last 50 years we have not seen a cycle like this.”

A mixture of falling property values, lower rents and unemployment had left many unable to service their mortgages, he added.

“We’re spending a lot of time with people, restructuring loans and there have been some voluntary sales of properties in order to downsize,” Mr Schrum said. “There is still a large backlog of borrowers who are struggling.”

Lurking on the horizon is the prospect of the Federal Reserve, the US central bank, raising interest rates — something that many experts consider likely to happen at some point this year and which has often in the past been a precursor to Bermuda banks raising their lending rates.

HSBC Bank Bermuda chief executive officer Richard Moseley said that in the event of a US interest rate rise, the bank would consider the full picture carefully before charging borrowers more.

“We are sympathetic with the many borrowers who have challenges,” Mr Moseley said. “At the moment, we are going through discussions with many borrowers to try and keep them in their homes.”

Against that backdrop, he said, any decision on lending rates would be appropriately measured.

Overall, Mr Moseley felt rising interest rates would benefit the Bermuda economy. The Island’s huge insurance sector, which holds billions of dollars in liquid assets, would be able to gain higher returns on them, and so could banks like HSBC Bermuda.

So a rising rate environment would help companies take the focus off costs and think more about growth.

Mr Moseley said he saw “green shoots” in the economy and growing interest from many potential home buyers amid lower property prices.

“Many people are looking for single-family properties, in the $1 million to $1.5 million range,” he said. “And they are very specific about where they want to live. They may be qualified for financing but they are focused on a particular area, where it may be difficult to find those properties.”

Mr Moseley said the bank was keen to lend to qualified borrowers and had plenty of capacity.

He added: “All of our colleagues can take pride in the Bank’s response to challenging times across the spectrum of our customer base from individual households to corporate customers.”

He said the bank had focused on providing thought leadership. It sponsored the first Bermuda Business Confidence survey, complete with the views of private-sector decision makers, which has gone down well in the community and which the bank hopes can be repeated every six months.

It also brings in HSBC experts from overseas to share their views on key economic and investment areas with bank clients.

And it continued its community work. Mr Moseley said HSBC employees had volunteered more than 8,000 hours of community service since launching its Staff Volunteer Community Action Day Programme in 2006.

The bank has also upgraded its hi-tech offerings, increasingly demanded by a tech-savvy community. “Customer preferences are changing and our personal mobile banking application launched in 2013 has grown significantly in popularity as we made additional improvements to internet banking convenience and security features as well as increased our social media presence,” Mr Moseley said.