Hongkong and Shanghai Banking Corporation (HSBC) on Tuesday said its profit before tax from India operations in the first six months this year rose 33 per cent to $451 million, compared to the year-ago period. The growth was aided by robust commercial banking, global banking and markets businesses.
The bank has set a target of $1 billion pre-tax profit from India business in the medium term. India is the bank's third-most profitable market in the Asia-Pacific region after Hong Kong and China, and sixth overall.
In 2010-11, HSBC's standalone net profit from India operations surged 89 per cent to Rs 1,528 crore from Rs 810 crore a year earlier. “With a continued positive, macro-economic outlook for India and HSBC's global financial strength and connectivity, we have the momentum to focus on sustainable growth, since India plays an increasingly important role in cementing HSBC's leadership in Asia,” said Stuart A Davis, chief executive officer, HSBC India.
While the expansion of the bank's domestic loan book was muted due to its strategy of growing credit cards and personal loan portfolios selectively, the demand for external commercial borrowings from it large and mid-sized corporate clients surged in the first half of this year. The bank's domestic loan book stood at $6.1 billion as of June 30.
In the retail and wealth management business in India, HSBC cut its losses to $4 million during January-June from $50 million in the corresponding period last year.
“We ran down our unsecured loans strongly, which helped us to reduce impairment charges. We are now growing this book in a controlled and calibrated manner,” Davis said. The bank's unsecured loan book stood at $446 million as of June 30. It has about one million credit cards
HSBC had earlier said it planned to reduce its global headcount by 30,000. The move, however, is unlikely to result in any job losses in India.
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“Asia is a growth story for us. Both India and China are classified as strategic markets. We are trying to streamline our operations and continue to grow,” said Peter Wong, chief executive of HSBC (Asia-Pacific). “India already, to a certain extent, has a very high attrition rate. There is a war for talent. There would be reallocation of resources, but the headcount in general would grow if the economy grows,” he said.
HSBC said it was still awaiting the Reserve Bank of India's approval for its proposed acquisition of the commercial and retail banking businesses of Royal Bank of Scotland in India.