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HSBC India PBT Soars 33 PC To $451 Million

PTI 02 Aug 2011, 16:30:19 IST

Mumbai, Aug 2: Global banking major HSBC today reported a 33 percent jump in profit before tax from India operations in the first half ended June to USD 451 million (about Rs 2,000 crore) on strong growth from lending to large and medium corporates, despite a flat loan-book growth.  

“This strong 33 percent rise in pre-tax profit at USD 451 million is complemented by very good asset quality and strong liquidity. We are optimistic about the India growth story. These numbers make India the sixth most profitable market for us globally,” HSBC India Chief Executive Officer Stuart A Davis told reporters here.

The British lender's domestic unit also reported major improvements in its retail and wealth management verticals by bringing down losses massively to USD 4 million from a high USD 49 million in the year-ago period.

Its global banking and markets vertical's revenue rose to 392 million versus the year ago period's USD 245 million while for commercial banking doubled to USD 78 million. HSBC Asia-Pacific chief Executive for Peter Wong said a greater focus will be laid on the unsecured lending business comprising credit cards and personal loans which was cut during the slowdown years.

“In India, although the loan growth is kind of flat, actually what we are trying to do is that we will sort of emphasise on the unsecured portfolio and then the increase the secured portfolio,” he told reporters from Hong Kong in a video conference.

Davis said the overall assets stood almost flat as compared to the same period last year at USD 6.1 billion, with commercial loans constituting USD4 billion, loans against property at USD732 million, residential mortgages at USD 949 million and unsecured loans, (the credit card and personal loan businesses) at USD 446 million during the reporting period.

Given the global events like the US debt crisis, sovereign debt crisis in the Eurozone and problems in the Middle East, Wong said the bank will be a “little cautious” on loan growth in the second half of the year.

Davis said with USD 451 million PBT, India is the 6th most profitable geography for the bank. India's GDP is poised to grow in the eight percent range till end 2012, but the policy decision being taken right now will ensure if the economy will sustain the rate going forward or not.

Davis further pointed out that quick decision-making, acting on corruption and consistency in policies as the key factor which will help maintain the growth trajectory.

The bank will adopt a “controlled and calibrated” approach, while growing its unsecured lending book and primarily the sourcing of such assets will be primarily done internally through existing relationships while it will be “selective” on external sourcing.

Because of the high rates scenario, the bank is witnessing clients going slow on capex plans while there is a greater appetite for external commercial borrowings which does not show in HSBC India's books, Davis said, adding that there is no stress in assets as a result of the high rates. The bank is hoping to get a go-ahead on its intention to acquire Royal Bank of Scotland's branches by the year end.

“We are in constant touch with the Reserve Bank and once their nod is in we are ready to complete the deal,” Davis said, but refused to divulge the details about what is holding the RBI back from extending permission. PTI