'We've benefitted from acquisitions abroad'

BANKER-SPEAK: Naina Lal Kidwai

, she discussed HSBC's performance in India.

How important are the emerging markets, particularly India, for the group?

HSBC is truly a global bank. In most of the countries that we operate, HSBC is a 'street bank'. HSBC is the biggest emerging markets bank in the world. In 2006-07, pre-tax profit from Asia, Latin America, Middle East and other emerging markets was around 50 per cent of the HSBC group's total revenues.

The huge global network comes to our advantage as it helps us in adopting best practises and business ideas and products from other regions into India and vice versa.

For Instance, India feeds talent in the treasury space to the group. In India, I was not happy with the customer relationship management (CRM) system. We did a search across the group and invited the head of CRM from Mexico to implement the system here in India. He also trained our people in India.

Which businesses are contributing to the bank's growth?

The bank's two new initiatives in India are the retail and consumer finance businesses. The consumer banking business is yet to give us major profit. The consumer finance piece is a major contributor to the bank's top line growth. We are investing in this business as it will pay in the future.

The retail banking thrust was there from the beginning. We have launched the HSBC Global Premier service. A global premier customer can walk into any HSBC branch anywhere in the world and will be recognised as such across all branches.

The retail segment constitutes around 40 per cent of the bank's advances, while the balance is corporate. The retail segment could go up to 50 per cent. The corporate and the treasury businesses are doing very well. It's been great to see Indian companies place their flag across the globe. We have benefitted from this exercise. The pipeline for corporate activity continues to be robust.

Which are the major cross-border deals financed by HSBC?

The bank was the advisor and also a lender in the Corus-Tata Steel deal. We also managed India's largest debenture issue of Reliance Communication. We hold around 5 to 10 per cent of the financing on our books, while the balance is sold off. We are largely a trade bank and handle about 5 per cent of India's imports and exports.

Cashing in on our global footprint, we have been able to build up a strong transaction banking business and handle the Indian corporate requirements. This has lead to a strong profit growth. Our thrust would also be on building the small and medium enterprises (SME) business.

How has your consumer finance business fared?

HSBC Pragati Finance (the consumer finance offering of the bank) has been tested in markets like Mexico and Indonesia.

The profile of the customers is very different. Accordingly, we have marketed and carved out sections within our branches for HSBC Pragati Finance customers. We advertise the product differently taking into account the profile of the customer.

For instance, in the consumer finance section within a branch, tea is served in a dhaba glass. In a short span of time since its launch, we have become the largest originator of loans in Coimbatore, Ahmedabad and Chennai.

We are booking around 14,000 loan accounts a month under Pragati Finance. Pragati Finance consists of clientele with low income levels and loan ticket sizes under Rs 50,000. Roughly half of our customers in the consumer finance business have not been with a bank ever before.

Like other foreign banks are you open to inorganic growth options or looking at acquiring a strategic stake in a non-banking finance company?

As a bank we are present in 26 cities with 47 branches. Around 80 to 85 per cent of the bank's income comes from big cities. If you are asking if I am desperate to increase my reach, my view is that organic growth is more controlled, which has reflected in our profit growth.

However, I would be happy to increase my presence. Last year, the bank opened four new branches. Our application for setting up a non-banking finance company is pending with the Reserve Bank of India. In the past, we had expressed our interest in acquiring Global Trust Bank. To look at inorganic growth options, the partner has to bring to the table substantial value.

Are you hopeful of the banking sector opening up in 2009?

Certain sections of the Indian banking system are still vulnerable. Hence, some dramatic change would have to happen for the RBI to open up the banking sector in 2009.