HSBC to double SMB credit

The Hongkong and Shanghai Banking Corporation (HSBC), one of the leading foreign banks, is planning to change the business mix gradually in India.

It has decided to focus on small- and medium-scale industries and mid-market enterprises (MME) in the next couple of years, as it feels that SMEs and MMEs in the country are bankable entities now.

Naina Lal Kidwai, the country head of HSBC, said the bank, a late entrant in the SME space in the country, is planning to catch up fast.

She pointed out that HSBC wants SME, MME and retail business to have equal weightage in its total business compared with its corporate business.

"SME is a bankable proposition for us in India. In the BSE, more than 80 per cent of the listed companies are MMEs. We want to replicate our retail banking operation in the SME space," she said.

HSBC has been a late entrant in the retail banking space too. According to Kidwai, corporate operations now constitutes more than 75 per cent of the bank's business.

By 2009, the bank wants the weightage of corporate business to come down to 50 per cent and the non-corporate business, such SME and retail, to double its weightage from 25 per cent to 50 per cent.

"For this, the retail and the SME businesses have to grow much faster than corporate business. Our experience shows that it is possible," she added.

Retail credit of HSBC is now growing at 30 per cent a year.

Commenting on the retail business, the HSBC country head said the bank is focusing on home loans, personal loans, education loans and fee-based income, such as distribution of mutual funds, insurance products, and management of high networth individual (HNI) portfolio.

"The number of HNI in India will be tripled by 2010. Now, more than 83,000 Indians have assets over $1 million," she added.

Commenting on future targets, she added that the bank is targeting $300 million net profit from the Indian operations in the next couple of years from the current level of $250 million.

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Open to UTI Bank stake sale

HSBC is not averse to the idea of selling its remaining stake in UTI Bank. Naina Lal Kidwai, the country head of HSBC, said if opportunities come, the bank may sell its 4.96 per cent stake in UTI Bank.

"If we get a good price, we can do that because it is not a strategic stake. Like other investment, our objective will be to maximise gains," she added. She pointed out that HSBC has already brought down its holding from 15 per cent to this level in the last couple of years.

Commenting on the entry into NBFC sector, she added that once the government comes out with new guidelines, it may apply for licence to do business as an NBFC.

"It could be done through HSBC Securities, but before that, we might buy back the stake of other investors in HSBC Securities," she added. HSBC now has 75 per cent in the broking arm.