Strong lending in the UK underpins rise in profit from HSBC in the UK
By Bridging Loan Directory -
Joe Garner, head of HSBC UK Retail Banking, commented:
“Despite the ongoing challenging economic conditions, during 2011 HSBC used its unique international strength to lend record amounts to both UK businesses and individual customers, and critically our net lending to businesses grew against a backdrop of a shrinking market. We remain fully committed to helping the UK economy continue to recover and we will continue to support our customers through the challenges ahead.”
HSBC in the UK highlights for full year 2011:
- £1,547 million in pre tax profits, an increase of 17.2 per cent on 2010
- New facilities advanced to UK businesses of £49.38bn.
- Gross new facilities advanced to SMEs of £11.94bn, 15% increase on 2010
- Gross mortgage advances of £13.2bn, up 12.2%, from £11.77bn in 2010
- New UK mortgage lending market share of 9.60% per cent up from 8.75% in 2010
- Lending to our Commercial Bank customers in the UK at record high
- Impairment provisions fell to £796m down 34.8% from £1,222m in 2010
- Income broadly level at £5,626 vs £5,667m in 2010
Commercial Banking – Lending to UK businesses at record high
HSBC continues to grow market share in the UK, with total commercial bank lending up 5.8 per cent on 2010. The bank’s total new lending to UK businesses was £49.38bn exceeding its Merlin lending intention of £38.8bn, agreed with the UK Government. HSBC also issued gross new lending facilities of £11.9bn to Small and Medium-sized Enterprises (SMEs), in line with the 15 per cent annual increase in lending capacity the Government agreed with banks under Merlin.
HSBC’s net lending to UK SMEs – the real indicator of lending growth – grew by 4 per cent year on year, despite the UK market shrinking over the same period by 6 per cent*. The bank has also committed to lend more to UK businesses in 2012 than it did in 2011.
SMEs make a substantial contribution to the total value of UK exports and HSBC is in a unique position to support domestic businesses who are, or who are about to, trade internationally. With international trade being the key to future UK growth, HSBC is to launch a new multi-billion fund specifically for SMEs that trade with other businesses across the globe. The ‘HSBC International SME Fund’ will provide at least £4billion of lending to SMEs with a turnover of up to £25million and will be available in the coming weeks.
HSBC is playing its part in growing the UK economy, in 2011 UK exports rose 13 per cent and over the same period our export related business grew 33 per cent, within which trade finance lending underpinning exports grew 91 per cent.
HSBC’s Commercial Bank now supports over 1.3 million businesses in the UK, an increase of 6.8 per cent compared to 2010. The bank helps almost 11,000 customers a month start up a new business.
Retail Banking – Mortgage lending growth continues at pace
Since the start of the financial crisis in 2007, HSBC has increased its total mortgage lending to UK homeowners by over 75 per cent, with its market share escalating from 2.5 per cent to 9.6 per cent currently. In 2011 alone it increased its gross new advances to £13.2bn, up 12.2 per cent from £11.77bn in 2010.
This growth is expected to continue with HSBC making available at least £15 billion to UK homeowners in 2012, with £3 billion specifically set aside for first time buyers. This commitment represents an estimated market share of over 11 per cent, a record market share for the bank and will help in the region of 150,000 homeowners and over 27,000 first time buyers. In 2011, HSBC lent £2.8bn to first time buyers, up from £2.6bn in 2010.
Wealth Management continues to attract internationally minded customers and the bank now has 1.1 million Premier customers in the UK, an 11 per cent increase on 2010. World Selection portfolios, HSBC’s managed investment funds, throughout 2011 continued to attract significant customer deposits with funds under management of £2.45 billion, up 21 per cent on 2010.
HSBC and the UK
HSBC in the UK is a significant contributor to the banking group’s overall profit, but as an indication to its global breadth, 90 per cent of the group’s profit (before tax) is made outside of the UK. However, much of this profit is repatriated to UK shareholders via dividends. In 2011 HSBC paid a total dividend of £3.8bn, only two FTSE 100 companies paid more, and since the start of the financial crisis HSBC has been the FTSEs second highest dividend payer.
HSBC Group also pays a significant proportion of it UK profit in tax in the UK. HSBC paid US$1.5bn in UK taxes in 2011, equal to two thirds of profits made by its UK bank. The bank also supports UK businesses who are its suppliers, spending £1.7bn annually.
Even though HSBC significantly increased lending in 2011 to both retail and commercial customers, the bank’s UK asset to deposit ratio remains at a conservative 83.3 per cent. HSBC is the only major UK bank with an asset to deposit ratio of less than 100 – thereby allowing us to continue to self fund our lending and consistently offer market leading products. Retail and commercial customer deposits increased 6 per cent during the year to support this ratio.
What you can expect from HSBC in 2012:
- We aim to approve at least 80% of applications for finance from SMEs
- Through our Trade Finance capabilities we will support export trade to the tune of £7bn.
- For customers trading within the UK or internationally we will seek to manage £30bn of their invoices, providing critical working capital for these customers.
- We aim to have up to 200 International Commercial Managers to ensure this key customer group is fully supported.
- We will offer apprenticeships to provide nationally recognised qualifications to 1,000 of our employees by the end of 2012.
- Employees can volunteer to work on community or charitable activities during paid working time, in 2011 this equalled 60,000 hours.
- We will support our employees community volunteering and fund-raising activities with £2m of matched funding.
- We will provide £500k to enable our employees to originate and run community projects across the UK.
- We will make £12m available in student bursaries over 5 years to help more than 200 bright students from disadvantaged areas or backgrounds attend leading schools and universities in the UK.
- We will continue to give our customers the ability to make charitable donations over our ATM network which resulted in donations of over £0.5million in 2011.