India emerged as the third-most profitable market in the Asia-Pacific region for Hong Kong and Shanghai Banking Corporation in 2010, following a year of record profit, helped by lower loan loss charges and growth in loan portfolio.
The British bank's pre-tax profit from the India business expanded 82 per cent from a year before, to $679 million (Rs 3,070 crore).
"HSBC enhanced profitability in 2010 as all our businesses performed strongly and credit quality improved significantly. We have a clear strategy to increase quality assets and net fee income to accelerate growth," said Stuart Davis, chief executive officer for India operations.
In 2009, due to rising delinquencies in unsecured loans, HSBC India's profit before tax was $374 mn. This prompted the bank to go slow on unsecured loan disbursements. Davis said the bank had started to grow its unsecured loans "selectively" since October.
The unsecured loan book is now $526 mn (Rs 2,380 crore) , compared with $864 mn (Rs 3,700 crore) in 2009. HSBC's loan book in India is currently estimated at $6.7 billion (Rs 30,300 crore), including $1.46 bn of retail loans and $4.6 bn of corporate advances. It employs around 34,000 staff across its businesses in India.
Globally, the bank's pre-tax profit more than doubled to $19 bn in 2010. The bank's businesses in Asia-Pacific were the largest contributor to its profits last year, said Peter Wong, chief executive of HSBC for the region.
Listing plans
Davis said HSBC has no near-term plans to list itself in the local bourses. It will, however, consider listing as an option if Reserve Bank of India (RBI) revises norms mandating foreign banks to form subsidiaries in India.
"For us, here in India, we don't have any intention of listing at the present time," said Davis. "If we were to become a subsidiary, then one does not want to ever say never. It would be then an option, which would be open to us. But we have no (such) intentions at present."
Last year, HSBC's British rival, Standard Chartered Bank, issued Indian Depository Receipts (IDRs), listed on the Bombay Stock Exchange and the National Stock Exchange. StanChart said the IDR issue was aimed at boosting its market visibility and brand profile here. It also gave Indian investors an opportunity to invest in a foreign bank.
The bank raised about Rs 2,490 crore by selling 240 million IDRs. Every 10 IDRs represented one ordinary share of StanChart.
HSBC is currently exploring listing opportunities in Shanghai, China.
Subsidiary route
When asked if HSBC favoured the branch model for foreign banks' presence in India, Davis did not elaborate.
"There are pluses and minuses to both. It is really a question of going through the process in terms of the discussions with the RBI. When the final rules are set, then we will be able to make a clear, objective analysis," he said.
