The country's oldest foreign bank HSBC India has said it will go slow on retail and credit cards businesses as it wants to focus on global banking, investment banking, wealth management, insurance and mortgages as the key growth drivers in the country.
"We will not chase retail customers till we turnaround our loss-making retail lending and credit cards businesses. We hope to do so by the end of the year," HSBC India Group General Manager and Country Head Naina Lal Kidwai told PTI in an exclusive interview here today.
Only last month, HSBC clinched a deal to acquire the retail and commercial banking business of Royal Bank of Scotland in India. RBS' 31 branches with a network of 1.1 million customers was expected to give HSBC greater exposure in the Indian market.
"HSBC won't go after customers to sell our retail banking or credit card products as that will impact the quality of our services, besides increasing our risk portfolio," Kidwai, who was earlier this month appointed to the group's global board, added.
On whether the bank is planning to exit credit card business, Kidwai quipped, "There is no such plan, but we will not be running after customers to sell a credit card or a personal loan. There is no plan whatsoever to discontinue this business, as we've a customer base of 1.5 million even today."
The RBS acquisition was the third major deal for HSBC in India.
In June 2008, HSBC entered into joint venture with Canara Bank and Oriental Bank of Commerce for insurance business, gaining access to a distribution network of 5,000 branches and 50 million customers.
In September of the same year, HSBC acquired IL&FS Investsmart, now HSBC InvestDirect, a major retail brokerage with more than 130,000 customers and outlets across 52 cities.
Explaining the reason for this go-slow approach, Kidwai said, "Our rapid expansion in the past has led to the growth of some riskier assets and we don't want to grow that way. In fact, we have been going slow on retail banking since the past four years or so, and by the end of 2010, we will have more good numbers to share on this front."
To a query on what would then be the focus growth areas of the country's oldest multinational bank, she said, in the time to come the bank will be focusing more and more on global banking (corporate lending business), insurance, investment banking, mutual fund distribution, wealth management and mortgages as the key growth drivers in the country.
Apart from that NRI business and retail broking will also be other thrust areas for the global lender, which has an asset base of USD 2450 billion as on June 30.
The retail business of the London-headquartered HSBC, which is the largest European lender, in the country has been making losses for the past four years and in the first half of 2010, it had reported a $50 million loss, even as it posted $340 million profit during the period-its best-ever numbers from the country so far, and thus becoming the third biggest profit centre for the group.
"This ($50 million) was not a loss in fact as this was our provisioning for bad debt being carried over since the past four years," Kidwai said, adding "the losses you see are from when we scaled back" on credit cards and unsecured lending.
Established in Bombay as the Mercantile Bank of India way bank in 1853, HSBC is the oldest foreign bank in the country as also the largest in terms of market share (with a 35 per cent share of the custody business) and in terms of people employed-35,000 as on June 30, Kidwai informed.
