HSBC's Mexican Arm Receives MXN6.29 Billion Through Capital Increase
December 23 2009 - 12:16PM
Dow Jones News
The Mexican banking arm of HSBC Holdings PLC (HBC, HSBA.LN) said
Wednesday that it has received 6.29 billion pesos ($487.5 million)
through a capital increase by its parent company.
In a filing with the Mexican Stock Exchange, HSBC Mexico SA said
the additional capital provided by Grupo Financiero HSBC shows its
"confidence and commitment to the company and Mexico's financial
sector."
HSBC entered Mexico's banking industry when it paid nearly $1.14
billion for the country's fourth-largest bank, Grupo Financiero
Bital, in late 2002.
HSBC, however, has struggled to compete in a market dominated by
other large foreign banks, namely Banco Bilbao Vizcaya Argentaria
SA (BBVA, BBVA.MC) and Banco Santander SA (STD, SAN.MC) of Spain,
Citigroup Inc. (C), and Bank of Nova Scotia (BNS, BNS.T).
Net profit at Grupo Financiero HSBC fell 56.7% year-on-year, to
MXN1.56 billion, during the first nine months of 2009, as a drop in
net interest income, lower fee income, and higher loan-impairment
charges took their toll on its bottom line.
The loan portfolio and retail deposit base at its bank, HSBC
Mexico, have shrunk in the last year to the point where it now
ranks fifth by both measures, according to data from regulator
CNBV.
The bank reported MXN159.78 billion in loans on its books at the
end of November, down 11.3% compared to the same period last year,
according to preliminary data published by regulator CNBV.
Overall loans in the banking industry were nearly unchanged at
MXN1.925 trillion during the same period.
The bank has also suffered more than rivals from rising levels
of bad loans, especially in credit cards, as a recession makes it
harder for consumers and businesses to service their debts.
The bank's overall nonperforming loan ratio stood at nearly 5.3%
as of Nov. 30, compared with an average of 3.2% for the country's
seven top banks, according to CNBV data.
Luis Pena, chief executive of Grupo Financiero HSBC, said
earlier this month that he expects the group to return to growth
next year, led by small business, mortgage and credit-card
lending.
-By Ken Parks, Dow Jones Newswires; 52-55-5980-5177;
ken.parks@dowjones.com
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