The Hong Kong and Shanghai Banking Corporation's (HSBC) Indian branches have posted a 34 per cent increase in profit to $529 million in 2007 as against $393 million in 2006. | |
| This is the first time the Indian operation has crossed the $500 million mark in profits. India is among the top-10 contributors to global profits. The bank has retained the 2007 profits, which had boosted the bank's capital base to $2 billion. |
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| The rise in profits is largely driven by the growth in the global banking and makets business and commercial banking business, which includes middle market enterprises and small and medium enterprises and other businesses, including asset management, insurance and global resources. |
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| The bank's personal financial services (retail banking operations) reported a loss of $70 million as on December 31, 2007, as against a loss of $24 million on December 31, 2006. The loss was recorded due to planned investment in growing consumer finance business and higher loan impairment charges. |
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| The personal lending portfolio, excluding mortgages, grew by 67 per cent during 2007. Mortgage balances rose by 27 per cent, benefiting from increased marketing and direct sales efforts. By the end of 2007, the bank had around 2.7 million credit cards in circulation in India. |
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| "We continue to invest in our business and hence the loss. We have launched our retail operations in 18 centres during the course of the year. We continue to operate through the 47 branches as RBI has not granted any fresh branch licence. We have invested heavily in the existing 47 branches and luanched consumer finance and other businesses. The small and medium enterprises business will be the major growth driver for the bank,'' said Naina Lal Kidwai, chief executive officer, HSBC India. |
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| Global banking and markets business and the commercial banking business saw a 54 per cent increase in profit to $429 million and 91 per cent increase in profit to $88 million respectively. |
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| Loans and advances to customers increased 46.89 per cent to $7,220 million in December 2007 as against $4,915 million in December 2006. Customer accounts increased to 51.47 per cent to $12,021 million as compared to $7,936 million. In India, current account and deposit balances increased by 40 per cent, partly from liquidity chasing new initial public offerings. |
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| In India, the bank saw higher loan impairment charges due to volume growth of the portfolio, along with a change in the collection methods of staff and agencies and regulatory restrictions on collections. The bank added 700 employees to drive business expansion, bringing the total to over 4,600. In India, the consumer finance branch network and the credit card business were expanded. |
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| Operating expenses were up by 29 per cent to US$125 million. Contributing to the rise were operating expenses in India, which more than doubled as HSBC continued to build its private banking business. |
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| Murthy to join board |
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| HSBC has appointed N R Narayana Murthy, chief mentor, Infosys Technologies, as independent non-executive director, from May 1, 2008. Murthy will receive an annual remuneration of 65,000 pounds (about Rs 52 lakh). The appointment will be for three years, which will expire at the end of the bank's 2011 annual general meeting. |
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