Hsbc To Focus On Products, Not Rate War

HSBC today said it will not be drawn into the ongoing price war among banks, but will compete more on products and quality of service.

Niall S K Booker, the new chief executive officer (CEO) designate at Hongkong and Shanghai Banking Corporation of India said in his first press meeting prior to taking charge that while there appears to be a price war going on, "we will not compete simply on pricing".

HSBC proposes to launch new products to be in the market. At the same time, the HSBC group will stick to its economic profit strategy established in 1999.

"There has been a transfer of pricing from the producers of goods and services to the consumers with greater transparency. As pressure builds up, HSBC intends to cut down on costs and launch new types of products," Booker said.

Booker is currently the deputy CEO and will take over as the CEO on November 15. Zarir J Cama, who is the current CEO will take over as deputy chairman and CEO of HSBC Bank Malaysia Berhad.

Outlining the bank's focus areas, primarily on growth in the retail sector, and investment banking, Booker said the group has set up an internal target that non-interest income should constitute 50 per cent of the total income.

"This (non-interest income) is an indication of where we will like to grow. This income is less volatile and is particularly good in markets where interest rates are highly volatile as in India," he added.

Booker said that HSBC will like to grow its retail banking business, especially in housing finance and personal loans, and less in car finance. Mortgage financing will help the bank hook customers and cross-sell insurance and investment products.

However, in light of the delinquencies in the credit card business, HSBC has taken a conscious decision to slow down the growth in this area. In June 2002, the number of cards issued by the bank stood at 5.79 lakh against 5.09 lakh in June 2001.

The credit card growth has slowed down in the last six months and delinquencies are a major reason for it, said Booker. "We want to make sure that our scoring point works," he added. The number of card delinquencies has fallen in the last one or two months.

HSBC is looking at investment banking with the opening up of the economy, largely on account of privatisation. "On the buy side of transactions, the bank can arrange for underwriting, structuring debt, as there is a good synergy with our corporate banking. This could be done through an integration of corporate, treasury and investment banking," Booker said.