HSBC 2007 Annual Report Download - page 210

HSBC HOLDINGS PLC
Report of the Directors: The Management of Risk (continued)
Credit risk > Exposure > 2007 / By industry sector
208
marketing initiatives in late 2006. In Canada, other
personal lending balances rose by 23 per cent, with
strong growth in both the consumer finance and
retail bank lending portfolios.
In Latin America, other personal lending
balances rose by 34 per cent to US$17 billion, due to
growth in credit cards and payroll loans. In Mexico,
where marketing campaigns added customers and
portfolio management programmes were put in place
to improve customer retention and card usage, the
strong growth in credit card balances drove a 41 per
cent rise in lending. In Brazil, other personal lending
balances increased by 28 per cent.
Loans and advances to corporate and
commercial customers increased by 12 per cent to
US$401 billion (2006: US$358 billion), with strong
growth in most regions.
In Europe, corporate and commercial advances
rose by 10 per cent. In the UK, asset balances rose
by 8 per cent as investment in direct sales channels
and the recruitment of sales staff led to increased
customer numbers. In France, lending balances
increased by 12 per cent as HSBC continued to
raise its brand profile.
In Hong Kong, HSBC achieved growth in
corporate commercial lending of 3 per cent, due to
increased demand for loans from manufacturers with
operations in mainland China, and for other intra-
Asian trading.
In Rest of Asia-Pacific, the corporate and
commercial loan book increased by 29 per cent as
expanded operations helped to gain new business.
Strong growth was recorded in many countries,
including South Korea (42 per cent), India (34 per
cent) and mainland China (83 per cent). HSBC set
up new International Banking Centres, increased its
branch network and launched enhanced online
banking services throughout the region. In the
Middle East, new relationship managers were hired
in the UAE, and HSBC entered the small business
segment in Bahrain, Qatar and Jordan. In mainland
China, local incorporation helped increase lending as
the branch network expanded. HSBC was the first
international bank to set up a rural branch, targeting
businesses in the agricultural sector. In India, the
addition of new staff in the branch network helped
lift lending balances.
In North America, corporate and commercial
lending rose by 15 per cent, led by Canada, where
balances increased by 24 per cent. In the US, loan
growth in Commercial Banking resulted primarily
from strong activity in middle market lending,
despite a slowdown in commercial real estate
activity. 2007 saw an extension of middle market
activities in Chicago, Washington DC and the West
Coast as HSBC continued its branch expansion
programme. Global Banking and Markets funded
a number of facilities in connection with its
participation on leveraged and acquisition finance
syndicates, which added to loan balance growth in
the US. In Canada, lending balances rose against the
backdrop of strong economic growth, particularly in
Western Canada.
Corporate and commercial lending in Latin
America rose by 6 per cent as HSBC expanded its
network of International Banking Centres and
launched new initiatives to gain customers in the
small and micro-business segments. In Mexico,
volumes grew in commercial real estate lending,
trade and factoring. The loan portfolio in Brazil grew
strongly, led by increases in volumes in the giro facil
product, guaranteed account, rural loans and working
capital financing.
Loans and advances to the financial sector
rose by 53 per cent to US$99 billion. The increase
was primarily due to Europe, up 45 per cent, in line
with the strategy to expand the capital-efficient
client-driven reverse repo business. In North
America, lending to the financial sector rose by
65 per cent, due to substantial growth in balances
with securities brokers and other financial
institutions, as excess liquidity was invested in
reverse repos rather than Fed funds.
Loans and advances to banks increased by
23 per cent to US$237 billion. Lending to banks in
Hong Kong rose by 27 per cent and in Rest of Asia-
Pacific by 39 per cent, due to growth in customer
deposits across the region and increase in money
market placements. In Europe, lending to banks rose
by 28 per cent, due to project and money market
loans in the UK and reverse repo lending in France.
The following tables analyse loans by industry
sector and by the location of the principal operations
of the lending subsidiary or, in the case of the
operations of The Hongkong and Shanghai Banking
Corporation, HSBC Bank, HSBC Bank Middle East
and HSBC Bank USA, by the location of the lending
branch.