HSBC's Indian ops post 44% drop in profit

March 2, 2010 - PRLog -- The Indian operations of HSBC has reported a 44% drop in its net profits for the year ended December 31, 2009, to $374 million from $666 million a year earlier. The drop comes on the back of a loss of over Rs 1,000 crore in retail banking. The bank has also recorded a loss in commercial banking and lower profits in global markets. However, the group’s profits from non-banking sources like brokerage and asset management have improved.

HSBC has reported a marginal rise in its global earnings to $5.83 billion in 2009 from $5.73 billion a year earlier, according to media reports. This was less than analysts expectations. Despite lower earnings, India continues to the ninth-largest profit generator for the group — same as that in 2008. Incidentally, profits from its associate business in China has gone up by 18% to $1.5 billion while profit from other mainland China operations has fallen by 65% to $111 million.

Personal financial services, the term used by HSBC for retail banking, reported a loss of $219 million against a loss of $155 million last year. In the past three years, the bank has reported losses of $444 million in the past three years — from 2007-2009. This would be the one of the largest losses by any bank in retail operations in India. Unlike Citi, HSBC does not do business through a finance company. Citi Financial, the US bank’s NBFC arm, had posted a loss of Rs 729 crore for the year ended March 31, 2009.

HSBC has in a media statement said delinquencies in India had began to moderate in the fourth quarter and has also exited the consumer finance business in India and Indonesia. The commercial banking operations in India has posted losses of $41 million against a profit of $118 million last year. The global banking and markets business posted a 32% drop in profits to $393 million compared with $578-million profits in 2008. Profits from other business in the country nearly doubled to $240 million against $123 million in 2008.

Net loans and advances by HSBC in India has seen a continuous drop in the past three years — $7.22 billion in 2007, $6.24 billion in 2008 and $4.89 billion in 2009. Gross loans and advances has seen a fall across all categories — mortgages fell 20.5% to $883 million, other retail or personal loans fell by 41.7% to $864 billion, other property-related loans fell 7% to $458 million while other loans such as commercial, international, trade and other loans fell 9.9% to $3 billion.

HSBC has also said loan impairment charges against cards in India remained broadly in line with 2008. In commercial banking, significant deterioration was experienced in India in the first half of 2009. It also added that there was an increase in delinquency across personal lending portfolios, in response to which HSBC took action to restrict mortgage and personal lending. HSBC pointed that it, however, extends credit to selected cards customers, which resulted in volume growth and also contributed to higher loan impairment charges.

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