HSBC Sees LatAm Outperformance

HSBC expects relative strong LatAm performance, but sees risks of further deterioration. “We expect parts of Asia, the Middle East and Latin America to continue to outperform Western economies, but to be constrained by the global downturn,” says the bank in its 2008 annual report, released Monday. “The possibility of a combined credit crunch and stagflation in Latin America cannot be ruled out,” it adds, noting the potential for more contraction in availability of credit, as well as increased likelihood of bankruptcies and unemployment. HSBC made a $2.037bn pre-tax profit in LatAm last year, a 6.5% decline versus 2007. Slight increases in Brazil and Argentine business helped mitigate the impact of declines in Mexico, Panama and elsewhere. The region accounts for 21.9% of the 12-month gain, up from 9.0% the previous year. In global banking and markets, HSBC made $641m pre-tax profit from LatAm, up 24% versus 2007. Total LatAm assets dropped 3.1% to $97.944bn, 3.9% of the global total. HSBC notes that LatAm corporate and commercial lending rose by 20% last year, driven by higher lending in Brazil as a result of strong growth in the trade loans portfolio and working capital products.