LONDON (Reuters) — Europe’s biggest bank, HSBC Holdings, said its growth has slowed since the first half of the year due to a weak US housing market and a slowdown at its investment bank arm, sending its shares to a six-month low.London-based HSBC, which owns the Bank of Bermuda, said yesterday its profits in the third quarter were ahead of a year ago but its underlying revenue growth slowed.

The bank signalled the US housing market had deteriorated further in recent weeks and personal insolvencies in Britain would remain high, prompting it to take a more cautious stance on lending in some markets.

“It’s not a case of pulling in our horns, but we are being cautious on underwriting quality and seeing how some of this debt can be placed in the market,” Michael Geoghegan, HSBC chief executive, said on a conference call.

HSBC shares closed down 1.5 percent at 923 pence, the second weakest performer in a higher UK share market, to value the bank at $107 billion ($211.5 billion). The shares fell as low as 913-[1/2]p, their lowest level since May.

HSBC, which is the world’s third biggest bank with operations spanning 81 countries, attributed the slowdown from first-half revenue growth of 15 percent to seasonal variations in fee income, its decision to scale back lending and a weaker performance in investment banking.

“It’s a pretty cautious statement,” said Mike Trippitt, analyst at Oriel Securities. “None of this is a huge surprise. It’s just rather negative to see it all in one place.”

Steven Hayne, analyst at Fox-Pitt Kelton, added: “It wasn’t positive but consensus (earnings per share) forecasts for 2007 are only for growth of eight percent following 13 percent this year, so the market is already saying they expect a slowdown.”

HSBC said its investment bank (CIBM) division’s profits in the third quarter were well ahead of a year ago, but growth was weaker than the 37-percent jump reported in the first half.

Douglas Flint, finance director, said CIBM’s revenue was “reasonably flat” from the previous year’s third quarter, but costs were higher.

CIBM’s growth slowed as a result of reduced trading revenues and lower balance sheet management revenues due to a flat interest rate yield curve in the United States, which squeezes banks’ net-interest margin, or the difference between what banks pay to borrow money and what they charge to lend it.

Flint said a weak US housing market had deteriorated further in the three weeks since the bank highlighted the problems in the sector.

The bank said its bad debts in the third quarter were “modestly up” on both the previous quarter and the year ago quarter.