HSBC 2008 Annual Report Download - page 205

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21 per cent of total loans and advances to customers
(including the financial sector and settlement
accounts).
In Europe, other personal lending declined
by 11 per cent from the end of 2007 to
US$54 billion. The decrease was primarily
attributable to the UK as a stronger focus on secured
lending restricted originations in the unsecured
portfolio. The sale of certain non-core credit card
portfolios in the first half of 2008 also contributed to
the decrease in the UK. In France, balances declined
due to the sale of the regional banks in the second
half of 2008. In Turkey, continued expansion of the
branch network during 2008 resulted in higher
balances, particularly in credit cards and overdrafts.
In Hong Kong, other personal lending declined
by 2 per cent to US$13 billion. HSBC remained the
market leader for credit cards in Hong Kong based
on cards in circulation, cardholder spending and
balances.
In Rest of Asia-Pacific, other personal lending
rose by 12 per cent, primarily due to strong growth
in the Middle East. Elsewhere in the region, balances
rose in Malaysia and Indonesia.
In North America, other personal lending
balances declined by 12 per cent to US$97 billion. In
the US, consumer finance business and credit card
lending fell due to the combined effect of tighter
underwriting criteria and lower marketing
expenditure. A reduction in non-credit card personal
lending reflected the decision to cease new business
in guaranteed direct mail loans and personal home-
owner loans in the second half of 2007, and tighter
underwriting criteria applied to originations in the
remainder of the portfolio. In the mortgage services
business, second lien balances declined due to the
continued run-off of the portfolio following the
cessation of originations in 2007. Lower vehicle
finance lending at HSBC Finance reflected the
discontinuation of certain product offerings and the
cessation of new vehicle loan originations from the
dealer and direct-to-consumer channels in July 2008.
HSBC USA also discontinued originations of
indirect vehicle finance loans, but second lien loans
increased following a promotional campaign
channelled through the branch network in the first
half of 2008. In Canada, lower balances were
attributable to the disposal of the vehicle finance
businesses during the year.
In Latin America, other personal lending rose by
9 per cent to US$15 billion. Lending growth was
primarily concentrated in Brazil and reflected strong
demand for payroll loans and vehicle lending. In
Mexico, balances were broadly in line with
31 December 2007 and the mix was adjusted
towards customers of higher credit quality. Further
growth was restricted as risk appetite was adjusted
by closing certain products to new originations and
tightening underwriting criteria on cards, leading to a
sharp reduction in the number of cards issued in
2008.
Loans and advances to corporate and
commercial customers rose by 19 per cent to
US$407 billion, with strong growth across all
regions. Lending was primarily concentrated in
Europe, where it accounted for 54 per cent of
advances to this sector, of which more than
40 per cent were in the UK.
In Europe, corporate and commercial advances
rose by 24 per cent. In the UK, lending rose by
35 per cent, driven by growth in lending to large
corporates. Balances declined in France due to the
sale of the regional banks in July 2008.
In Hong Kong, corporate and commercial
lending rose by 19 per cent, driven by higher lending
in commercial, industrial and international trade,
commercial real estate and other property-related
sectors.
In Rest of Asia-Pacific, strong corporate and
commercial lending growth was experienced in the
Middle East and Singapore, which rose by 26 per
cent and 50 per cent respectively and, to a lesser
extent, in Malaysia, India and Taiwan, the latter due
to the acquisition of the assets and liabilities of The
Chinese Bank in March 2008. In the Middle East,
the corporate and commercial loan book continued
to grow, owing to an expansion of lending in UAE,
particularly for trade and investment projects, in
addition to general business growth. In Singapore,
higher lending was driven by strong demand from
the international trade sector. Lending in Japan
declined due to the closure of inactive and
unprofitable accounts, and lending in mainland
China fell as a result of tightened government
regulations and tighter lending criteria in response to
the weakening local economy. This partly offset the
strong growth elsewhere in the region.
In North America, corporate and commercial
lending increased by 7 per cent, driven by growth in
HSBC USA and, to a lesser extent, in Canada.
In HSBC USA, higher lending to corporate and
commercial clients reflected the targeted expansion
of middle market activities and the drawdown of
existing credit facilities, partly offset by a decline in
commercial real estate activity as the bank managed
down its lending exposures in light of lower risk
appetite and a deterioration in market conditions. In
Canada, corporate and commercial lending rose by