HSBC Iraq unit 2011 profit seen up 20-25 percent: chief executive

The Iraqi unit of UK bank HSBC expects 2011 profit to be 20-25 percent higher than in 2010 as industrial and trade activity in the war-battered country starts to increase, its chief executive said on June 19.
Iraq is slowly trying to rebuild dilapidated infrastructure more than eight years after the 2003 US-led invasion that toppled dictator Saddam Hussein, and its economy is starting to recover after decades of sanctions and isolation.
HSBC, which re-entered Iraq in 2005 when it bought 70 percent of local lender Dar Es Salaam, has a wide customer base across the country's oil, telecoms, cement and industrial sectors.
"Already we're seeing some double-digit growth year on year, but I think there's room for a lot more," Chief Executive James Hogan told Reuters in an interview.
"We would see 20-25 percent in lending growth translated to profitability."
HSBC was active in Iraq at the beginning of the previous century, originally operating as the Imperial Bank of Persia, until the country's lenders were nationalised in 1964.
It has 16 branches in the country, from Dohuk in the north to the southern oil hub of Basra, and employs nearly 500 people. The bank's customer base sits at around 24,000. "Our strategy in the country is very much wholesale led, so we will never be the bank on every corner. We're trying to establish ourselves in the larger commercial centres," Hogan said.
He said the bank had an average profit before tax of $5 million to $15 million since 2005, adding around 30 percent of its revenue was ploughed back into training and hiring staff. Iraq has seven state-owned banks, 23 private banks and eight Islamic private banks, according to the central bank website.
Its private lenders are expected to gradually consolidate, especially after Iraqi regulators laid out a programme for banks to increase their capital to $213 million by June 2013.
While private industry is relatively small compared with the state-owned enterprises, the country's economic prospects are largely dependent on oil and gas-related income, and the government is expected to spend heavily on the country's infrastructure, offering opportunities to lenders such as HSBC.