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Our Bureau

New Delhi, Aug. 6 Hongkong & Shanghai Banking Corporation Ltd (HSBC) sees profit growth in its Indian operations moderating in percentage terms in calendar year 2008 on the back of some slowdown in retail credit due to hardening interest rates and difficult collection environment.

“Our (Indian operations) profit before tax grew 24 per cent in January-June 2008. I see some moderation in profit growth (in percentage terms) for the entire 2008. Last year, we had high double-digit growth. In 2008, we expect double-digit growth, but not as high as last year,” Ms Naina Lal Kidwai, Country Head, India, HSBC, told reporters here.

She said that the bank was seeing no slowdown in credit offtake from big corporates and small and medium enterprises. However, there has been a natural slowdown in retail segment.

“There has been an increase in provisioning in our retail asset book. We are not actively pushing retail loans in the last few months. The collection environment in the country has got difficult. Credit defaults are up. CIBIL alone is not enough. In the next 3-4 years, we need to have robust credit rating process,” Ms Kidwai said.

Ms Kidwai highlighted that about 40 per cent of the bank’s book was retail assets. “It won’t go beyond 40 per cent. Our overall book size is also expanding,” she said, adding that bank’s balance sheet size in India as on end-June 2008 was about Rs 76,000 crore.

On interest rate outlook, she said that interest rates are expected to remain “flat” and unlikely to come down during the next three months.

“If interest rates continue to stay high for the next six months, there will be a slowdown in investment spend. From being buoyantly optimistic about business environment, India Inc is now cautiously optimistic. They are adopting a wait and watch approach,” Ms Kidwai said.

Meanwhile, Ms Kidwai made it clear that HSBC was in no hurry to offload its 4.94 per cent stake in Axis Bank. “Our stake in Axis Bank is a portfolio investment. Banking sector stocks have taken a beating and definitely, it is not the right time to offload,” she told reporters on the sidelines of a seminar on financial inclusion.

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