HSBC India profit up 9% on growth in business loans

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Mumbai: Hong and Shangai Banking Corp Ltd (HSBC), Europe’s second-largest asset lender, said its pre-tax profit in India rose 9% to $1.11 billion during the year fiscal year ended in 2021, compared to $1.02 billion in 2020, thanks to a 42% growth in revenue from its commercial banking business which includes loans to small and medium-sized businesses.

Its commercial banking division’s pre-tax profit rose to $265 million from $187 million in 2020, likely due to growth in lending to small and medium-sized enterprises (SMEs) and offset stagnant profits from Global Banking and Markets (GBM) banking which is the largest revenue center of banking in India.

GBM’s pre-tax profit was unchanged at $593 million, but still contributed more than half of the bank’s profit in India. HSBC’s GBM division serves large corporations and also includes the bank’s treasury income.

“HSBC India has always been among the top five contributors to group profits. The wholesale business performed very well in the liability, asset, banking and capital markets. Although we have grown across the board, certain segments like Corporate Banking and International Banking Subsidiaries have stood out and continue to outpace the market. India is a key growth market for HSBC globally and we are looking to expand our international wholesale and wealth management business,” said India CEO Hitendra Dave.

India is the fourth largest contributor to the bank’s global profit behind Hong Kong, the United Kingdom and China.

Growth in the commercial banking business is the result of the bank’s sustained focus on this segment over the past five years.

In an interview with ET in August 2021, Rajat Verma, Head of Commercial Banking, HSBC said the bank’s corporate loan portfolio in India had grown at a compound rate of 16% over the past five years, driven by tripling SME lending to $1 billion. in June 2021 from $300 million in 2018 as Verma expanded the bank’s presence around the bank’s 26 branches in India.

Verma said the bank was open to expanding its portfolio, even though many foreign peers have limited their operations in India.

Last month, the bank announced it would acquire L&T Mutual Fund in India for $425 million subject to regulatory approvals as part of its global strategy to expand its wealth management capabilities in the country.

“We have accelerated the development of our wealth management capabilities in the rest of Asia by several years through two acquisitions. We have reached an agreement to buy AXA Singapore, which was finalized earlier this month and will expand our franchise insurance and wealth management business in our ASEAN regional hub “We have also agreed to purchase L&T Investment Management to strengthen our asset management business in India. Both deals represent important steps towards our ambition to be a leading wealth manager in Asia,” Group CEO Noel Quinn said in his post-results comments.

HSBC also plans to increase its stake in Canara HSBC Oriental Bank of Commerce Life Insurance Co Ltd to 49% from 26%, subject to further shareholder and regulatory approvals as part of its wealth management business.

Pre-tax profit for the bank’s Wealth and Personal Banking (WPB) division rose 25% to $20 million in 2021 from $16 million in 2020.

While pre-tax profit for the bank’s business center division, which provides support services to the bank, rose 2% overall to $232 million in 2021 from $228 million a year ago. one year old.

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