HSBC global board to meet in Mumbai

Ujjal K Basu Roy

Mumbai, Nov 19: For the first time in its more than 150 years in India, the board of directors of the Hongkong and Shanghai Banking Corporation Ltd (HSBC) will meet in the country on November 26
and 27.

HSBC’s presence in the country dates back to 1853, and on November 26 and 27, HSBC Holdings Plc’s chairman, Sir John Bond; HSBC’s chairman, David Eldon; and HSBC’s chief executive officer, Aman Mehta will fly down to Mumbai for the board meeting.
HSBC’s operations are divided into three segments — large countries which have profits before tax of $300 million and major countries which have $100 million. The rest of the world comes under the bank’s international segment. The large countries include Brazil, USA, UK, France, Hong Kong and China. The major countries are Argentina, Canada, Saudi Arabia, the United Arab Emirates (UAE), India, Singapore and Malaysia.

India’s importance in HSBC’s plans can be gauged from the fact that it is part of the bank’s major countries segment even though it does not yet have a PBT of $100 million. This is because HSBC expects its Indian operations to reach the $100-million mark this year or the next year, at the most.

At the moment, the bank’s personal banking business contributes about ten per cent of the income in India and the rest is contributed by the corporate finance side. HSBC is looking to make this ratio 50:50 in the next three to four years. Retail banking had contributed 20 per cent to advances with the balance 80 per cent being accounted for by corporate banking. HSBC’s chief executive officer (India), Zarir Cama, had earlier said that the bank wants to make this ratio equal in the next two years.

HSBC officials have all along emphasised the fact that the bank has invested in a major way in India in the form of technology, branches, direct sales agents and staff training and that its pay back time now.

HSBC had reported a 65 per cent increase in its net-profit at Rs 201 crore for the year ended March 31, 2001 for its Indian branches, up from Rs 122 crore in the preceding fiscal. Profit before tax rose 60 per cent to Rs 431 crore (Rs 269 crore). Deposits increased by 13.7 per cent to Rs 9,951 crore (Rs 8,755). Advances increased by 41 per cent to Rs 6,246 crore (Rs 4,302 crore). Total assets registered a growth of 23 per cent and stood at Rs 15,594 crore (Rs 12,666 crore). Total assets are expected to have grown to Rs 17,500 crore by the end of May.

The rise in the net profit of the bank was attributable to a 41 per cent increase in advances. The group expects a return on capital employed (ROCE) of 20 per cent, which is the benchmark and the ROCE for Indian branch operations has been about 32 per cent to 33 per cent for 2000-2001.