Asian Banking Trends
Overview of HSBC’s and Standard Chartered’s Key Asian Banking
Markets, Spring 2007

 

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How important is Asia for HSBC & Standard Chartered? — Asia is a key region
for both HSBC and Standard Chartered, representing 39% and 76% of 2006
group PBT respectively.
 Asian Outlook Strongest in Largest Markets — Citigroup’s 2007 GDP forecasts
have been upgraded for the largest Asian banking markets over the last year
(Hong Kong, Singapore, Malaysia) but remain generally unchanged elsewhere.
Growth is forecast to be highest in China (10.3%), India (9.3%) and Singapore
(6.2%) and weakest in Taiwan (4.3%), Korea (4.7%) and Thailand (4.7%).
 Loan Growth Trends Favour Standard Chartered's Mix — Loan growth in India
and Korea, regions that contributed 27% to Standard Chartered's profits but just
2% to HSBC's (2006), remains the most robust at c30% and c15% respectively.
 Deposit Growth Generally Strong, Exception is Korea — Over the last 5 years
deposit growth rates in most Asian regions (inc. Singapore and Malaysia) have
all trended upwards to double figures. Conversely, deposit growth in Korea has
fallen from a peak of over 40% in 2000 to just 4% on latest data.
 Credit Quality Improved Across All Asian Markets in 2006 — NPL ratios as a
percentage of total loans remain highest in Malaysia (4.7%) and India (3.7%)
with the lowest levels seen in Hong Kong (1.1%) and Korea (0.8%).
 UK stocks with Asian exposure remain Hold — We retain our Hold/Medium Risk
(2M) recommendations on both HSBC (TP 1,000p) and Standard Chartered (TP
1,600p).