‘On track’ for Project Merlin, HSBC reports

HSBC has declared that it is 'on track' to meet its Project Merlin small business lending targets, despite reporting a lower demand for credit.


HSBC has declared that it is ‘on track’ to meet its Project Merlin small business lending targets, despite reporting a lower demand for credit.

HSBC has declared that it is ‘on track’ to meet its Project Merlin small business lending targets, despite reporting a lower demand for credit.  

The high street bank is the first of the five banks, which have signed up to the government-backed initiative, to release details of its lending to UK companies including small and medium-sized businesses (SMEs).

After this week announcing a 3 per cent increase to its half-year pre-tax profit to $11.5 billion (£7.1 billion), HSBC insisted it was ‘on track’ to meet lending goals made under the agreement that aims to ease the tough financing environment for UK business. The bank lent £22.7 billion to businesses in the first six months of the year, which is more than half the full-year target of £38.8 billion.

However in lending to SMEs, the bank is shy of the 50 per cent mark, and reports that it has provided gross new facilities of £5.6 billion so far this year compared with the target of £11.7 billion for the full year.

In what may be confirmation of a Bank of England report in June that highlighted a trend of businesses avoiding bank credit applications because they feared their overdrafts would be cut or interest rates increased, HSBC reports that there has been lower than expected demand for lending from businesses.

Jacques-Emmanuel Blanchet, head of commercial banking at HSBC UK, comments, ‘the current environment remains challenging for many businesses and confidence remains somewhat fragile with demand for lending lower than we would like and many customers looking to repay lending facilities or not full utilising existing credit lines.’

Under the agreement signed in February, the big four banks – HSBC, Barclays, Royal Bank of Scotland and Lloyds Banking Group – and Santander UK, stated a capacity and willingness to lend £190 billion of new credit to businesses in 2011. Of that amount, £76 billion has been allocated to small and medium-sized enterprises.

HSBC has been the first to release lending data, but the Bank of England will publish quarter two results from all banks on August 12.

In other reported results, the total number of HSBC’s business customers increased to more than 1.2 million, total commercial banking lending increased by 7.4 per cent year on year and balances of trade finance facilities that support UK importers and exporters soared 43.9 per cent year-on-year.

Todd Cardy

Todd Cardy

Todd was Editor of GrowthBusiness.co.uk between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital. Connect with...

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