HSBC optimistic on LatAm, eyes flu

By Noel Randewich

MEXICO CITY (Reuters) - HSBC is cautiously optimistic about an economic recovery in Latin America, but a recent flu outbreak will delay a pickup in Mexico, where lending will suffer, a senior executive said on Friday.

HSBC (HSBA.L) expects little or no lending growth across Latin America this year, Emilson Alonso, head of the bank in the region, told the Reuters Latin American Investment Summit in Mexico City on Friday.

"If the signs we've seen now are really sustainable and resilient, I think in the third quarter we're going to start seeing things in the real economy improving," he said.

In Mexico, the swine flu outbreak that killed dozens of people and shut down the economy for five days is expected by the government to shave up to half a percentage point from gross domestic product in 2009.

The outbreak could delay improvements in loan delinquencies in Mexico and reduce demand for credit as families and businesses become warier, making a pickup in HSBC's business there slower than in countries like Brazil.

"It's going to be a little bit worse in Mexico unfortunately because of the epidemic. Mexico may take a bit more time," Alonso said.

Mexico's economy, which relies heavily on U.S. demand, contracted 1.6 percent in the first quarter from a year earlier and a much steeper drop is expected in the period between April and June.

Banks in Mexico, Brazil and other Latin American countries have weathered the global credit crisis relatively well because of their focus on traditional lending rather than risky subprime customers.