HSBC still positive on RP growth in 2009

Published by rudy Date posted on March 10, 2009

MANILA, Philippines – Despite the global credit crisis and its impact on most financial systems, the Hongkong and Shanghai Banking Corp. (HSBC) is still bullish over the growth prospects of the Philippine economy and its financial system.

“The signs are relatively positive,” Mark Watkinson, HSBC chief executive for Philippine operations, said.

Watkinson said that last year was a good year for the global financial institution and 2009 is “still good.”

Forecasts for Philippine economic growth range from two to three percent lower than the 4.6 percent in 2008 and the 7.2 percent in 2007.

But the HSBC chief executive said that comparing this with the near negative growth for the region, and the state of recession of other Asian nations, “it is still showing positive growth.”

Consumption will remain on the positive side as remittances from overseas Filipinos are expected to feed on private consumption. Growth rates for remittances are varied ranging from flat growth to single digit growth.

“We tend to agree with the Bangko Sentral ng Pilipinas (BSP) that a single-digit growth is likely this year from the 13- to 14-percent growth rates in the previous year,” he said.

Remittances coursed through the formal or banking sector reached a record $16.6 billion in 2008.

Due to the diversity of overseas Filipinos in terms of skills and locations, the global crisis is not expected to deal significantly on remittances unlike other remittance-dependent countries.

HSBC has limited direct access to the remittance business but the bank is able to tap the overseas Filipinos and their beneficiaries through deposits, lending and the various retail banking products like credit cards.

In the Philippines, bank clients reportedly average 1.9 credit cards, or roughly two cards per person. “We want to be the other card issuer,” newly-installed HSBC Philippines head of Personal Financial Services (PFS) Ron Logan said.

And to have greater access to its target market, HSBC has relocated some of its branches, and enhanced the same with premier centers.

HSBC, the universal bank, can only operate six branches. But its thrift bank can open as many as regulations and economics permit.

It has a total of 16 branches and eight premier centers located within the branches.

“We do not plan to open new ones this year,” Watkinson said.

Most of its branches are located in key cities nationwide including Metro Manila, Cebu, Davao, and San Fernando in Pampanga. Among the sites in Metro Manila are: Quezon Ave., Cubao, Mall of Asia, and Alabang.

In fact, HSBC in the Philippines has been eating into the market share not from foreign banks but from major domestic banks. That is in terms of high networth individuals.

While HSBC in the Philippines and most of the Asia Pacific region (ex-Japan) remains optimistic, its global operations are going through rough times.

HSBC Holdings plans to raise roughly $17.7 billion in a rights offer, while cutting 6,100 jobs. It had already set aside $42 billion to cover from bad loans directly and indirectly related to the US sub-prime explosion in the past three years.

Net income fell to $5.73 billion last year compared to the $19.1 billion in 2007.- Ted P. Torres, Philippine Star

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