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After consciously slowing down for two years, HSBC India is looking to grow its unsecured retail book in a selective manner, encouraged by the positive macroeconomic outlook and the reduction in losses in this segment.
Speaking to reporters after announcing the bank's results for 2010, Mr Stuart Davis, CEO, HSBC India said, “We will offer unsecured personal loans selectively to our customers and not in the open market as we did earlier.”
In 2010, the unsecured personal loans portfolio amounted to $526 million, down from $864 million in 2009.
The Indian arm of HSBC posted profit before tax of $679 million, up 82 per cent from $374 million in 2009, which is a record profit.
Total loans grew by 29 per cent to $6.7 billion, ($5.2 billion). Retail loans (unsecured loans and residential mortgages) grew to $1.46 billion ($920 million), while corporate or wholesale loans (including SMEs and trade loans, but not ECBs), grew to $4.6 billion.
The loan impairment charges declined by 83 per cent to $82 million.
“Winding down of the unsecured loan book and recoveries in corporate loans helped improve the asset quality,” Mr Davis said.
India is the third most profitable market for HSBC's Asia-Pacific arm, after China and Hong Kong, said Mr Peter Wong Chief Executive, HSBC Asia.
HSBC Asia reported profit before tax of $5.7 billion, higher by 29 per cent from $4.4 billion. Loan impairment charges for the Asia-Pacific arm declined by 60 per cent to $553 million, from $1.4 billion.
In India, HSBC will complete the acquisition of the retail and commercial businesses of Royal Bank of Scotland this year, Mr Davis said.
“We are expecting a robust loan growth and will continue to build our wealth management platform for increasing our customers,'' he said.
While the Reserve Bank of India seems to be in favour of the subsidiary route for foreign banks to expand their business in India, Mr Davis said there are both positives as well as negatives with this approach.
“The positives include reduction in tax and more flexibility in opening of branches which can increase the distribution network. The negatives include rural lending, which is a challenge because we have not done it before,” he said.
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