Profit growth set to slow: HSBC

HSBC India expects its profit growth to moderate in the 2008-09 financial year due to the prevailing high-interest rate environment leading to a credit slowdown in the country. “The profit growth will moderate this year,” said Naina Lal Kidwai, HSBC country head. HSBC India had posted a net profit growth of 41 per cent in 2007-08 and 64 per cent in 2006-07.

The UK-based HSBC group has posted a 28 per cent fall in profit before tax at $10.24 billion for the first six months ended June 30, against the year-ago period, even as the firm recorded strong growth in emerging markets, including India. India contributed 3-4 per cent to the global profit before tax. HSBC India has posted a 24 per cent growth in profit before tax in the first half of 2008.

 

HSBC India’s balance sheet stood at Rs 76,000 crore in 2007-08, 40 per cent of which is in retail. “We intend to maintain retail portfolio at that level,” Kidwai said. While it is rapidly expanding wholesale banking, corporate banking and trade financing, it is consciously moderating exposure in the retail sector owing to higher provisioning.

“Provisioning has gone up on the retail side, so the bank is not pushing too much there. We will watch the retail portfolio,” she said.

If interest rates remain on a higher level for the next six months, demand for credit from corporations may be impacted, she said. “I don’t think interest rates are going down, at least for the next three months,” she added.

PTI adds: HSBC today said it would maintain its five per cent stake in the country’s third largest private sector lender, Axis Bank, in the short term. “It is portfolio investment. We would maintain our stake in the Axis Bank,” HSBC Country Head Naina Lal Kidwai said.