HSBC Australia says its clients are more cautious in terms of credit risk than they used to be.

This means the bank is seeing an increase in demand for letters of credit (L/Cs).

Cautious future

Increased L/C usage was one trend flagged up recently by the head of the Australian arm of HSBC, Stuart Davis.

In an interview with news agency, Reuters, he said the bank was focused primarily on existing customers and was being "quite selective and cautious of new business."

Trade finance growth

Australia has not yet been as hard hit as Europe and the US by the economic downturn, but it is now thought to be heading for a recession.

In 2008, HSBC Australia reported increased pre-tax profits, up 42 per cent to A$176 million.

It has also reported strong growth in its trade finance business, as more exporters seek to secure payments by opting for L/Cs rather than open account transactions.

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