HSBC eyes Rp450b credit for small, medium firms this year

HSBC eyes Rp450b credit for small, medium firms this year

Urip Hudiono, The Jakarta Post, Jakarta

The Hongkong Shanghai Banking Corporation Ltd. (HSBC) Indonesia
plans to increase its loans to small and medium enterprises
(SMEs) to as much as Rp 450 billion (some US$49 million) this
year.

Seeing prospects in the sector in line with its core business
of trade banking, the London-based lender will also increase the
portion of SME loans in its credit portfolio to 40 percent within
the next five years, from the current 20 percent.

HSBC vice president for business banking Christophorus A.
Kowik, said on Tuesday that the management was optimistic over
the target as the bank had long been providing loans to SMEs.

"Our loans to SMEs as of February amounted to some Rp 300
billion, with almost no nonperforming loans (NPLs), showing that
SMEs are more resilient to economic downturns," he said.

"We hope to be able to increase this figure by 50 percent to
reach Rp 450 billion by the year's end."

Of the 3,300 corporate customers HSBC is currently catering
for, some 60 percent are SMEs -- mostly export-oriented
furniture, textile and foot ware home industries.

HSBC channeled close to Rp 300 billion in loans to SMEs last
year, and some Rp 240 billion in 2003.

Kowik said export-oriented SMEs would benefit from HSBC's loan
scheme, as they would be able to utilize the bank's global
network for their trading activities.

"They can, for example, obtain letters of credit more easily
and efficiently through our services," he said.

Operating in Indonesia since 1884, HSBC began focusing on
providing loans to SMEs some two years ago.

At present, HSBC has 12 branch offices in Jakarta, Surabaya,
Medan, Bandung, Semarang and Batam, and more than 70 branch
offices worldwide.

Furthermore, Kowik explained, HSBC will also provide softer
loan requirements for SMEs, including helping them conduct audits
and make reports.

"We will also push for collateral from the SMEs, as we will
base our credit approval on our analysis of their performance,"
he said.
"We usually approve loans if we see a stable performance over
two or three years."

The country's banking industry is expecting to disburse as
much as Rp 70 trillion to SMEs this year according to business
plans, Bank Indonesia said.