HSBC sees Guatemala, Mexico growth

ACAPULCO, Mexico (Reuters) - London-based HSBC (HSBA.L)(0005.HK) aims to add Guatemala to its Central America-wide operations from 2009 and sees strong long-term growth in Mexico, the bank's regional president said on Thursday.

Paul Thurston told the Reuters Latin America Investment Summit that HSBC has applied for a banking license in Guatemala and hopes to start operations there next year.

He also expects HSBC's Mexican loan portfolio to grow in line with the local industry this year at between 20 and 25 percent.

HSBC, one of the world's top banks, in 2006 paid $1.77 billion for Panama's Grupo Banistmo, the biggest banking group in Central America, but was left without a foothold in Guatemala.

"Guatemala is the largest economy in Central America and closely linked to Mexico, and so it makes sense for us to look at how we can create a presence in Guatemala," said Thurston, who heads the bank's operations in Mexico, Central America and Colombia.

HSBC will compete with New York-based Citigroup (C.N) in Guatemala, where many people do not yet have bank accounts but are eager for consumer, auto and housing loans.

Central America is also rapidly integrating its economies via the region-wide free-trade pact with the United States.

The bank, which operates in more than 75 countries, wants to expand in Latin America to target middle classes in emerging markets amid slowing growth in its core markets in the United Kingdom, Hong Kong and the United States.

Latin America represents 9 percent of HSBC's global earnings, with Mexico alone now accounting for 4 percent.

Thurston said there was great potential to increase those earnings over the next decade. "If you consider that ten or eleven years ago those figures were at zero and we had ten offices across Latin America. Now we have four thousand. The growth rate in earnings and in the overall contribution is increasing all the time," Thurston said.

NO U.S. DAMAGE

Thurston said he saw no impact from the U.S. credit crisis in HSBC's Mexican operations and that Mexico's young population meant there would be demand for financial services for years to come.

"Demand for credit is still strong," Thurston said. "There is demand for consumers, for small businesses, there is demand right through the industry, so I don't see any pulling back in demand for credit at the moment.

"The outlook is good ... There will be 15 million young Mexicans who will need financial services in the next five years," he said.

Thurston said while HSBC was targeting the fast-growing low-income segment in Mexico, the bank also sees revenues from its corporate business, taking companies to international capital markets, and from banking services for wealthy Mexicans.

Thurston also expected HSBC to be more active in securitizing auto loans and credit cards in Mexico over the next few years.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Robin Emmott and Armando Tovar)