HSBC sees 2009 as 'good year' for economy

MANILA, Philippines - Global banking giant Hongkong and Shanghai Banking Corp. (HSBC) said it expects 2009 to be a good year for the bank and for the Philippine economy, adding that 2010 will be an even better year as economies worldwide emerge from a crippling recession in 2010.

“2010 should be a better year for the Philippines and for HSBC, but it will not be as good as 2007. It will probably be in 2011 that profits will equal if not surpass 2007 levels,” Mark Watkinson, president and chief executive officer of HSBC Philippines, said yesterday.

He said the corporate lending segment of their business performed positively offsetting a slowdown in their retail lending.

The corporates, the middle market, and the small and medium enterprises have been borrowing, while the big businesses have flocked to the capital markets to fund their expansion, he said.

Capital raised through the Philippine Dealing and Exchange Corp. (PDEx) had reached a record P100 billion, mostly accounted for by San Miguel Corp., Megaworld and EDC.

Watkinson said as more companies list in the bourse and take advantage of the capital markets, the Philippine economy would move forward at a faster pace.

The HSBC chief executive said while the Philippine capital market is “very, very young” compared to its neighbors in the Association of Southeast Asian Nations and the rest of the Asia Pacific region, it is a start, and that it should continue to catch up with the rest of the region,” he added.

In the Philippines, two-thirds of funds raised by corporates come from bank lending and the remaining from other sources including the capital markets. But for the rest of the region, it is the opposite. When the trend starts to favor fund-raising through the capital markets, more funds will be freed for lending to the retail market.

The HSBC president said what continues to favor improved growth for 2010 and beyond is remittances from overseas Filipinos.

The Bangko Sentral ng Pilipinas (BSP) projected money transfer by overseas Filipinos to expand at least four percent to a record $17.1 billion this year from $16.4 billion 2008. Including the so-called informal sector, it is estimated to expand to $19 billion.

Remittances, which account for 10 percent of gross domestic product (GDP), fuels private consumption and offset the poor performance of the economy. — Ted Torres