HSBC India reports 82% surge in PBT at $679 mn

UK-headquartered banking major HSBC today reported 82% surge in profit before tax (PBT) from India operations to a record-breaking $679 million, driven by a jump in credit offtake by corporates.

The bank's Chief Executive Officer Peter Wong Tung Shun said this is the best-ever performance for the lender in India and holds special significance as it comes after a difficult year in 2009 that saw profits dwindling by nearly half.

In 2008, the bank's PBT from India was $666 million, which went down to $374 million in 2009 because of slow credit offtake, Shun told reporters over a video conference link from Hong Kong.

India is the third-biggest contributor to the profits of the parent company after Hong Kong and China, he said.

HSBC India witnessed 29% growth in credit to $6.7 billion in 2010 with corporate loans accounting for 67% of the book, Shun said.

The bank, which operates in India through the branch route, rather than having a subsidiary, had consciously cut down on unsecured loans in 2009 and first three quarters of 2010, its Chief Executive for India Stuart Davis said, adding the bank will now start getting back into the segment "selectively" rather than doing an open market operation.

Unsecured loans stood at $526 million in 2010, down from previous year's $864 million.

HSBC does not have any immediate plans of listing in India, unlike its peer in the foreign banking space Standard Chartered which had an IDR issue last year, Davis said.

However, post policy changes, if the bank adopts to operate as a subsidiary, listing is an option, he added.

The RBI, which is favouring foreign banks to adopt a subsidiary route for a better regulatory grip, is expected to come out with fresh guidelines on the issue soon and has currently put up a discussion paper.

For 2011, HSBC India will focus on closing the acquisition of RBS Bank branches, driving loan growth further and acquiring new customers, Davis said.