INDIA RANKS AMONG TOP 10 CONTRIBUTORS TO HSBC GROWTH

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British major HSBC’s Indian operations were among the top 10 contributors for the group globally. HSBC’s Indian operations reported a 34.6% rise in profits before tax to $529 million for the calendar year 2007. This is against $393 million profits before tax for the previous year. The Indian operation continue to be ranked 10th globally, similar to the previous year.

The group reported a 10% rise in profit before tax to $24.2 billion for 2007 while net profits were up 21% to $19.13 billion. This is in spite of a $17.24-billion writeoff due to subprime and other credit provisions. Incidentally, the Asian operations of the group now contribute 55% of the profits against 40% earlier. The profits in India also include that of the AMC operations, BPO operations, software development centres, insurance joint venture and the securities business. The profits were at $83 million against $92 million the previous fiscal.

The Indian operations were affected by a $70-million pre-tax loss against $24 million in 2006 due to its investments in consumer finance business and higher loan impairments. The higher loan impairment charges, according to the group, were due to volume growth of the portfolio, along with a change in collection methods of staff and agencies and regulatory restrictions on collections. HSBC India country head Naina Lal Kidwai said: “We have been on an investing mode in the consumer finance business. We are making an operating profit in the retail business. The wholesale banking has seen a 60% rise in income, with revenues doubling from 2006. The commercial banking reported a 91.3% rise in profit to $88 million ($46 million) while global banking and markets reported a 54.8% rise in profit to $429 million ($277 million).”

The net interest income rose from wider asset spreads and balance sheet growth, driven by selective lending related to the booming real estate sector. According to Ms Kidwai, HSBC has been a new entrant in the consumer finance business. Unlike other players, the group will continue with the business as, according to Ms Kidwai, it is in the higher end of the consumer finance business.

HSBC now has nearly 2.7 million credit cards in circulation in India. The business continued to expand while delivering operating income growth of 33%. In the retail banking space, mortgages were at $1.5 billion ($1.338 billion), other personal loan $1.72 billion ($1.06 billion), property-related loans were at $339 million ($203 million).

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