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.