HSBC sees LatAm, emerging markets as revenue drivers

Bnamericas Published: Tuesday, December 05, 2006
UK financial group HSBC (NYSE: HBC) sees the resource-rich economies of Latin America and other emerging markets offering the strongest growth prospects in the near term, bank executives told a conference call. HSBC's financial performance in 3Q06 was better than in the same period last year as growth in emerging markets offset bad debt woes in its US and UK businesses, HSBC CEO Michael Geoghegan said, without providing 3Q06 figures. "The emphasis on emerging markets should not be underestimated. All our businesses are focusing on the distribution capability we have worldwide," he said. "The core businesses of emerging markets are up and accruals have been a drag for the whole industry for some time, as we all know. We have managed to substitute this with other revenues, focused very much on emerging markets," Geoghegan added. "Investment in organic growth opportunities continued to be strongest in our emerging markets personal and commercial banking businesses, notably in Mexico, India, Turkey, the Middle East, Brazil and across Asia, including in mainland China," the bank said in a press release. The bank said it would take a more cautious stance on lending in some markets as the rise in insolvencies looks unlikely to abate in the medium term. "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," Geoghegan said. On November 23, HSBC extended its footprint in Latin America by completing the acquisition of Panama-based Grupo Banistmo for US$1.77bn. The purchase strengthens HSBC's existing operations in Panama - where it already operates through 19 branches - and establishes a presence in five new markets: Colombia, Costa Rica, El Salvador, Honduras and Nicaragua. HSBC's 1H06 pretax profits rose 18% to US$12.5bn on the back of stronger revenues from its investment bank operations and emerging markets. HSBC serves over 125 million customers worldwide through some 9,500 offices in 81 countries. The bank is one of the world's largest banking and financial services organizations with assets of US$1.74tn at end-June.

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