HSBC India net up 32% to Rs 197.8 cr

VRS charge of Rs 196 cr dents bottomline growth

HSBC India has recorded a 32 per cent growth in net profit at Rs 197.8 crore for the year ended March 31, 2004.

This is after the bank provided for a one-off charge towards the voluntary separation scheme (VSS) for a sum of Rs 196 crore, as 514 employees opted for the severance package.

"The bank's performance was driven mainly by business opportunities arising from the strong growth in the Indian economy as well as from our increased emphasis on marketing and sales activities," said Niall S K Booker, group general manager and chief executive officer for HSBC in India.

HSBC's total income rose to Rs 2,119 crore, of which Rs 1,414 crore accounted for interest income and Rs 705 crore accrued through fee-based income.

Citibank India, which declared its results last week, reported a 46 per cent growth in net profits at Rs 572 crore. This has been chiefly on account of fee-based income and foreign exchange earnings, as well as improved spreads.

HSBC officials said that the bank has yet to take a call on whether it will repatriate its profits.

The foreign bank's capital adequacy ratio currently stands at 14.54 per cent, well in excess of the stipulated 11 per cent. Last March, HSBC group brought in $ 150 million into the country.

HSBC attributed its higher earnings to improved performance in all segments, with a clear focus on the retail segment. Personal financial services accounted for 36 per cent of total advances, amounting to Rs 9,628.1 crore.

Treasury operations accounted for 25 per cent of total revenue.

According to a press communique, had the bank not provided for this extra-ordinary charge, its bottomline would have increased by 109 per cent to Rs 313.4 crore over the previous financial year's net profit figure of Rs 150.3 crore.

Similarly, on account of this extra-ordinary charge, HSBC's return on asset (RoA) stood at 0.91 per cent. On a higher net profit figure of Rs 313.4 crore, its RoA would have amounted to 1.44 per cent.

Total deposits during fiscal 2004 increased by 27 per cent to Rs 16,269.9 crore, with demand deposits doubling from the previous financial year and savings deposits rising 39 per cent.

Retail assets recorded significant growth. "Our home loan portfolio doubled to Rs 2,000 crore as a result of concerted sales and marketing efforts. Net non-performing assets (NPAs) declined to 0.70 per cent of net advances from 1.03 per cent in 2002-2003," stated HSBC.

In absolute terms, net NPAs dropped to Rs 67.6 crore, against Rs 84.4 crore in fiscal 2003. This was despite moving to a 90-day NPA norm.

Contributing to the improved bottomline is HSBC's ability to keep its expenses low. This is even as it has expanded its Indian operations. Its cost to income ratio fell to 45 per cent in fiscal 2004 from 57 per cent in the previous year.

Operating expenses during the financial year rose by only two per cent, stated HSBC. This is even as HSBC expanded its presence to a total of 35 branches.

Plans are afoot to further expand HSBC's local presence in Indore, Vadodara, Nagpur, Pune and Delhi.