HSBC Anticipates SME Loans to Jump 20 Per Cent on the Back of International Trade
HSBC announced on Tuesday that it expects to see loans to small to medium enterprises (SME) to grow 20 per cent this year on the back of the 1 billion dirham fund the bank has set up to support SMEs: 30 per cent of this fund has been earmarked for Emeriti businesses after strong growth in the region in 2011 and with trade predicted to grow by over 12 per cent in the next decade.
HSBC’s exposure to the SME sector in 2011 was over $600m, with growth doubling on the previous year. This has led the bank to eye up the sector in the UAE for continued growth throughout 2012, despite the fact that overall loan growth in the region was reported at just over 0.7 per cent for five biggest banks in quarter one 2012.
This is the third such fund HSBC have launched in the region in the past three years, but is by far the largest. HSBC previously hosted two funds of $100m each in 2010 and 2011, which were both hailed outstanding successes with 2010’s fund receiving allocation within six months and 2011’s taking only half that time. This year’s fund dwarfs that of the previous two years combined, resting at $272m, and is expected to be allocated in record time.
In previous years high percentages of the funds have been awarded to SMEs with international business needs: 67 per cent of 2010’s fund went to back-up international trade, while 87 per cent of 2011’s fund went to the same. With that in mind, HSBC’s 2012 tranche focuses on SMEs with cross-border trading requirements which account for around 76 per cent of all small to medium businesses in the UAE. With over 90 per cent of all Emirati-based businesses carrying out international trade, this is a lucrative market and no doubt this is why HSBC are predicting high-growth in the sector over the coming year.
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