When HSBC announced its record-breaking $21bn pre-tax profit for 2005, it almost went unnoticed that the region that accounts for the smallest portion of the group’s bottom line was also the one that showed the strongest growth for the year.
Latin America’s contribution to profit soared by nearly 50% to 3.1% compared with 2.3% the previous year. “We have had a presence in Latin America for more than a century, but the movement that started in 1997 sprang from a network of representative offices of Midland Bank,” says Youssef Nasr, HSBC Group managing director for South America.
The UK-based giant has been expanding its Latin American network with an eye on a booming domestic consumer banking market as well as growing demand by multinational customers for services in the region.
In the past few months, HSBC has acquired Italian bank BNL’s Argentina operations for $155m, UK bank Lloyds TSB’s assets in Paraguay for $15m and applied for a permit to operate in Peru’s banking system.
“We took the view that consumer finance probably has a very strong future in emerging markets,” says Mr Nasr. “Over a period of time our intention was to take technology and savoir-faire from Household International [its US business] and move it into these markets. South America struck us as being very well suited for exporting a consumer finance model.”
HSBC takes a positive view of the degree of political and economic stability achieved in Latin America, and this is what has underpinned the bank’s impressive expansion in the region.
