More than just a local bank

The Eurozone debt crisis had reduced global liquidity as European banks start to deleverage. Adding to the challenges of doing business, Basel III may require banks to set aside more capital to support their trade financing business and this would increase the cost of credit. On the local front, exports and imports grew at a faster pace and public spending is rising but consumer spending moderated in 4Q compared to 3Q and private investments continue to lag. HSBC had retrenched some staff to focus on priority areas. Its bread and butter business, trade financing, continues to grow and the flow of trade is shifting to Asean. Another significant business for the bank is forex income from proprietary trading. HSBC's equity base is not as large as the largest local banks and does not have as many branches, but it is more efficient in deploying its capital. For the first three quarters of 2011, HSBC reported RM355 million from forex trades. The other outperformer in the group has been the Islamic banking business - it has been growing doubly faster than its conventional business. The next phase is to innovate and create Islamic products that do not just mirror conventional products, and to attract more funds from the Middle East. Mukhtar Hussain, CEO of HSBC Bank Malaysia and global CEO of HSBC Amanah, talks about these issues and trends.