SME sector growth looking good for HSBC

Leung, who is based in Hong Kong, has responsibility for the group's relationship with all middle market corporates and small and medium enterprises in the Asia-Pacific and Middle East regions.

Boom times in the Gulf

Given the geographic region that she covers and the aggressive growth witnessed in a number of markets, it was unsurprising to hear Leung immediately emphasise the speed of development in the Gulf with high oil prices generating extra liquidity.

'The current boom in the Gulf is centred on both equity and construction. Despite oil dropping to close to $50 a barrel recently, it will of course remain a key export. For the UAE specifically, key trade partners in Asia are Japan, China and India. At the HSBC, we are keen to follow the flow of capital both into and out of the Middle East.'

Trade between the Middle East and Asia is certainly expanding rapidly with non-oil trade between the region and China for example mushrooming by more than 500 per cent between 1997 and 2005, according to figures compiled by the United Nations. The HSBC is keen to facilitate even more of this.

'We are in all the growing markets and the HSBC has invested $5 billion in the Chinese financial sector alone. Trade between China and the Middle East will increase further and we will continue to invest in China.'

Emerging market SMEs

The increase in trade obviously means a healthy proliferation of developing businesses, including a large number of small and medium sized enterprises, and the HSBC is anticipating more SMEs coming under the bank's umbrella.

'We have targeted SMEs for the past three years now and have developed a range of products for them from phone and Internet banking to various flow channels. The sector has grown a lot in this period and we see great potential, with SMEs in emerging markets figuring heavily in 2007.'

Indeed, the HSBC employs 800 people in its commercial banking division in the UAE alone and is looking to add a further 150 in due course. Leung wasn't able to put a specific figure on how much the HSBC's SME banking sector has grown in recent times but admitted that the bank receives much of its income from small businesses.

'In any economy, about 90 per cent of all firms are small businesses and these employ the most people. It is the HSBC's aim to become a small company's first banker and then to stay its banker, offering support until these firms grow into bigger businesses.'

Attractive products

One of the main reasons the HSBC has seen continued increases in the number of SMEs choosing to bank with it largely comes down to its ever evolving product mix. Leung feels that small firms are looking for support 'twenty four seven' and seek solutions that save them time and hassle.

'Many small firms cannot afford to spare the time to keep visiting their local branch. Our focus group meetings have shown us that SMEs want user friendly products first and foremost - simple solutions that offer reliability.'

With that in mind, the bank has introduced its online trading service into the region and has also put together a range of insurance options. The HSBC is now able to offer SMEs bundled packages which will effectively cover all their potential insurance needs.

No slowdown fears

Leung was also very bullish about wider issues that might affect trade in the region such as rising inflation and a possible economic growth slowdown in the UAE.

'In some ways, a slowing down of GDP growth is good, as things become more realistic and healthy. The slowdown will in itself help cool inflation rates and enable the economy to consolidate. In emerging markets, we can see GDP growth is still outstripping the rise in inflation levels.'

It would certainly seem that Margaret Leung sees the HSBC adding significantly to the 20,000 businesses it already serves in the Middle East, as well as attracting many more in other booming economies across the Asia-Pacific region.