HSBC woos SMEs as loan growth slows

PUBLISHED : Saturday, 14 April, 2012, 12:00am
UPDATED : Saturday, 14 April, 2012, 12:00am


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HSBC is offering free business information and tips to small and medium-sized enterprises worldwide in a bid to draw more loan applications ahead of an expected slowdown in commercial loan growth this year.

The bank's head of commercial banking, Albert Chan, said growth in commercial loans in Hong Kong this year was likely to be less than the 22 per cent rise seen last year. He blamed weakening demand from overseas.

'Raw material costs have fallen more than 10 per cent since late last year. Coupled with a drop in the number of invoices, demand for loans has weakened,' Chan said

But the bank expects global trade to revive by 2014 and then accelerate, fuelled by China and robust trading within the southern regions.

According to HSBC, global trade is expected to double in value in the next decade to US$33 trillion, while Hong Kong's trade is forecast to enjoy average growth of 4.47 per cent a year between now and 2018, outpacing global growth of 3.84 per cent.

'We hope that by helping SMEs to find business, they will choose us as their bank,' Chan said.

Since March 23, HSBC has been posting data including the latest business trends, analysis of trade issues, trade regulations and statistics on the Trade Development Council's website.

The bank is also sending staff to advise participants in overseas meetings and at major trade fairs, with a focus on helping local enterprises win new partners in emerging markets including the Middle East, South America, Cambodia and Vietnam.

The TDC's deputy executive director, Benjamin Chau, said SMEs should adapt to a changing trend in trade, which was seeing more small and short-term orders.

HSBC's Chan said a return of capital flows should provide enough liquidity for SMEs to upgrade products and equipment to cope with changes. He expected China to relax liquidity further by cutting banks' reserve requirement ratio two more times in the next two months as inflation growth continued to slow.

A loan guarantee scheme to be launched as early as next month would help SMEs by lowering their financial costs. Chan said they were likely to be offered more favourable borrowing rates, with the government soon to guarantee up to 80 per cent of bank loans for SMEs, up from 70 per cent. Up to 20 banks have expressed interest in taking part.