HSBC plans low-key lending target

HSBC plans low-key lending target

Tony Hotland, The Jakarta Post, Jakarta

London-based Hong Kong and Shanghai Banking Corporation Limited
(HSBC) has set a conservative lending target for 2004 amid
government pressure on banks to revive their lending role.

The chief executive officer of HSBC in Indonesia Richard
McHowat said on Thursday that the bank was only targeting a 10
percent to 15 percent increase in loans over 2003, mainly for
corporate borrowers with an export orientation.

"To revive the lending role, we need support from the
government in terms of the legal system because it hasn't changed
much since the crisis. I think that's what makes many banks
reluctant," said McHowat.

He also said that in order to accomplish the target the bank
would see whether the corporations seeking loans were credible
candidates.

"The companies should make proper audits of their accounts and
conduct better corporate governance in order for us to make a
credit judgment," he said.

McHowat said the reason the bank's main target was the
corporate sector was due to the low rate of individual borrowers
in the country.

"Indonesian households don't really borrow and use loans. The
average household debt ratio is only 10 percent compared to the
GDP, which is the lowest compared to other Asian countries," he
said.

Besides that, he added, HSBC wanted to provide international
networks for domestic exporters, given the international status
of the bank.

The government has frequently urged the country's banks to
resume their intermediary role of providing loans. Experts
believe that despite the stable macroeconomic figures reported,
economic recovery is still low, given the low investment rate and
limited credit flow.

HSBC gave loans worth up to US$800 million to about 2,500
companies mainly in the textile, shoe, tobacco, and steel sectors
in 2003.

McHowat added that the bank had no expansion plans, such as
opening new offices to add to its present 12 branches.

"We intend to improve our current services and products, such
as credit cards, mutual funds, and sharia (Islamic) banking. The
market for sharia banking is tremendous here, but we've only
focused on developing the corporate and institutional sectors,"
he said.

HSBC, with a total Islamic customer base of around 115,000
worldwide, was the first foreign banks to offer a sharia service
in the country in Oct. 2003.