HSBC Philippines expects growth in all market segments amid rate cuts

HSBC PHILIPPINES expects to grow across all its market segments as expected rate cuts from the central bank spurs loan demand, its top official said on Tuesday.

“As interest rates are cut, one expects to see more capex (capital expenditures) activity in the market,” HSBC Philippines President and Chief Executive Officer (CEO) Sandeep Uppal told reporters.

Consumers are also expected to borrow more because loans and mortgage are cheaper, he said. “We believe we are well-positioned as the economic activity picks up on the back of declining interest rates.”

The Bangko Sentral ng Pilipinas (BSP) last month cut benchmark interest rates for the first time in almost four years amid an improving inflation and economic outlook.

The Monetary Board on Aug. 15 cut its policy rate by 25 basis points (bps) to 6.25% from a 17-year high of 6.5%.

BSP Governor Eli M. Remolona, Jr. said they could cut rates by another 25 bps within the year. The Monetary Board will meet again on Oct. 17 and Dec. 19.

Mr. Uppal said he expects HSBC to benefit from the Philippines’ economic growth.

HSBC Philippines expects the economy to grow by about 6% this year, hitting the lower end of the government’s 6-7% target. “That can be sustained, especially as interest rates are reduced,” Mr. Uppal said.

HSBC Philippines expects “strong” growth across its retail, wealth, and corporate segments.

Mr. Uppal said the bank’s retail side would be driven by the growing middle class, benefiting the lender’s consumer finance and credit card segments.

On the corporate side, Mr. Uppal said they are looking at funding companies that have been eager to expand internationally.

“A number of household names from the Philippines are investing overseas,” he said. “So we’re helping them go overseas. At the same time, a number of multinationals, especially in areas like IT (information technology), BPO (business process outsourcing), renewables, infrastructure and investing are coming in.”

Mr. Uppal said the bank faces risks from geopolitical tensions. “Obviously, the world is looking at the outcome of the US elections, so that provides uncertainty. I would say it’s more the unforeseen challenges,” he added.

Meanwhile, HSBC Philippines seeks growth opportunities in digital currency, he said.

“Clearly, that’s something we keep an eye on,” the CEO separately told the Management Association of the Philippines (MAP) International CEO Conference on earlier on Tuesday.

“But from the Philippine banking ecosystem perspective, it’s still very far off into the future. Our driving vision is to be the bridge to the world for Philippine corporates and Philippine individuals,” he added.

Mr. Uppal said HSBC Philippines would not be including every trend in the banking industry such buy now, pay later (BNPL) as part of its strategy.

“Is BNPL part of the strategy? Are we able to differentiate ourselves if we introduce that? Probably not,” he said. “We’d rather focus on what’s here now compared with something which is too far out.”

He added that he is “not a fan” of transformation since companies that undergo transformation all the time reflect indecisiveness or slack.

“Looking at your competition and environment and reacting to it on a daily basis is probably a much better strategy compared with coming up with a revolution,” he said. “Don’t change things too drastically, but do it one step at a time.” — Aaron Michael C. Sy