Tuesday, August 13, 2013

HSBC report pins profits in Southeast to internationalization

A new report covering North Carolina and the Southeast from British bank HSBC ties internationalization to higher profit margins in the region.

But it also shows that the Southeast lags every region except Texas, interestingly, for the percentage of companies with international operations. North Carolina also has the lowest percentage of jobs in the region tied to exports.

I asked Rick Lavina, executive vice president for Southeast corporate banking at HSBC based in Miami, whether it was internationalization itself that led to profits, or the fact that international companies were more likely to be large, established companies.

"We feel very strongly that internationalization gives you so many benefits that that’s the primary reason," he said. "If you’re international in nature, by nature you have more customers and more diversity economies to sell to." He also cited being able to source cheaper products and labor by having international operations.

Why is the Southeast lagging behind in internationalization? Lavina said perhaps it's because corporations here are less mature, and the New South economy developed more slowly than that of California or even the Rust Belt.

The report speaks highly of Atlanta as an international hub. I asked Lavina about Charlotte. He spoke highly of the city, noting that HSBC established an office in Charlotte in fall 2011 to serve corporate clients. It previously handled them through its Washington D.C. office.

"There’s a tremendous amount of large corporations that are domiciled outside of the U.S. that set up shop in Charlotte for all its great infrastructure," he said. "There’s a very high level of education there. The cost is competitive and it’s a great place to live."

HSBC, which is centered on international business, said it hopes to make this an annual report. Read the full report here.

COMMUNITYONE PLEDGES PROFITABILITY: The Asheboro bank says it has taken the steps it needs to be "profitable on a sustained basis" starting in the third quarter, as CEO Brian Simpson put it in a conference call with analysts Monday.

The bank lost $3.2 million in continuing operations in the second quarter, but CFO David Nielsen called it the best performance in four years. The loss was smaller year-over-year, and merger expenses from combining with Bank of Granite should now be gone.

Profitability will be driven by expected improvement in net interest margin, post-merger cost-cutting, branch closings from late June, and further improvement in the bad loan book, Simpson said.

****This is a preview of The Charlotte Observer's Bank Watch Morning Report, bringing you banking news from the region, the top financial headlines, and the news driving activity in the Charlotte market.****

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