HSBC CANADA BOSS HOPEFUL ON TRADE PROSPECTS.

Opportunities exist ‘even in a down economy’

Trade tensions may have dominated 2018, but the head of HSBC Bank Canada says international markets remain a key priority for the lender and its customers as the Canadian economy is expected to cool.

“Even in a down economy, there’s still going to be opportunity,” Sandra Stuart, president and chief executive of Vancouver-headquartered HSBC Bank Canada, the seventh-largest bank in the country, said in a recent interview with the Financial Post.

“If you look at our customers, they’ll tell you that either they’re in trade, they want to expand their trade, or they want to know about trade. So trade is absolutely an opportunity.”

Stuart said the bank, a subsidiary of London-based global lender HSBC Holdings plc., is “attuned” to the various trade troubles, such as Brexit-related anxiety.

The opportunities for HSBC, however, are on both the export and import fronts, such as customers looking to source more affordable materials from other countries or to branch out into new markets.

“There’s definitely some headlines out there that would cause you consternation,” Stuart said. “But our view is that if you’re competitive, you’ve got good products and services, if you understand what your point of differentiation is, there’s opportunity to grow.”

The CEO’S comments come after a year of traderelated turmoil, including the NAFTA renegotiations, the imposition of tariffs and sabre-rattling by Beijing and Washington. Stuart’s remarks also came amid more recent tensions in global trade, namely China’s anger with Canada over its arrest of a major telecom executive.

Still, Canada at least has the new trade agreement with the U.S. and Mexico, as well as previous deals struck with the EU and the Trans-pacific Partnership countries. And, as noted by Bank of Canada Governor Stephen Poloz earlier this month, those trade risks can be “two-sided.”

“The upside risk is that the United States and China come to terms, and the global economy enjoys a new source of lift,” Poloz said, according to a copy of his remarks.

Meanwhile, the motto for HSBC in Canada is that no domestic bank has its international footprint and no international competitor has its domestic presence.

Stuart also said HSBC has seen growth in two of the key trade corridors the bank is particularly focused on: China and the United States.

“I can tell you we have grown year-on-year in both corridors,” she said. “Trade continues to be picking up.”

Canada is a focus of HSBC’S global growth plans, and in October, HSBC Bank Canada reported a profit of $561 million for the nine months ended Sept. 30, up nearly nine per cent from the previous year.

Stuart, who has been in her current role for about 31/2 years, is expecting further investment in HSBC Bank Canada by its parent, albeit at a lesser rate.

“We’re definitely hitting the mark on all of our growth initiatives,” Stuart said. “And so that will result in more investment next year, but it’ ll moderate a bit.”

The CEO said the bank also has been gaining market share on the retail side of the business, where the lender has taken an aggressive approach to pricing at times, such as with mortgages.

While the housing market has faced headwinds from interest-rate hikes and new regulation this year, Stuart said HSBC Bank Canada’s mortgage book has still grown, just not at the same pace as 2017.

“We’re going to continue to be competitive on ... retail banking,” she said.

HSBC also managed to irk the Canadian energy sector after its parent said it would no longer finance new oilsands projects or pipelines.

Stuart, though, highlighted what HSBC’S policy still allows it to do, “which is quite a lot.”

“If you look at our balance sheet, we’re quite committed to Alberta, as we always have been,” she said.

HSBC Bank Canada’s wholesale loan portfolio for the energy sector is around $6.1 billion, with $1 billion of its assets under management also invested in the industry.

The forecast for the Canadian economy in general, is for a period of middling growth. However, Stuart suggested that other sectors of the economy may start to punch above their weight.

“So what you’ ll see is other sectors start to pick up and, and you’ll see a rebalancing of where the growth comes from,” she said.

HSBC Bank Canada’s biggest business has been its commercial banking operation. And Stuart said that while consumer consumption and commercial real estate have helped fuel economic growth, she sees future opportunity in industries such as agriculture and transportation.

“But within that, there’s still opportunity probably to do more with your customers in terms of trade products, trade services, so you never exclude your base,” she explained.

Stuart also noted the faster rates of economic growth expected in some emerging markets that customers may be considering. “That’s part of the equation as well,” she said, “is, ‘do I think I can do better in another market and accelerate my growth?’ ”

As for the clouds hanging over trade ties, Stuart doubts they are going away.

Sandra Stuart