HSBC to rebuild retail loans book

HSBC Bank Plans to focus on credit cards and home loans this year.
After booking losses on its consumer banking business for three straight years, Hong Kong and Shanghai Banking Corporation (HSBC) looks to rebuild its retail loan book in 2010, aided by an improving credit environment.
The UK-based bank, the third-largest foreign lender in India by assets, plans to focus on credit cards and home loans, where lending was virtually at a standstill till the second half of 2009.
The bank is now disbursing home loans worth Rs 100-150 crore every month. “Our focus for 2010 is to expand our mortgages business profitably,” said Rajneesh Bahl, country head, personal financial services.
In 2009, the lender cut exposure to mortgages in India by 20 per cent to Rs 4,061 crore from Rs 5,115.2 crore at the end of 2008 to keep a lid on losses.
“There is no doubt the economy is looking up again and customer confidence is on the rise. As the market picks up, so does the demand for affordable housing; we believe the overall pie will get only bigger, which could result in an increased market share for all players,” Bahl said.
After months, the bank is expanding its credit card portfolio. And as a sign of growing confidence in the market, HSBC has started sourcing credit cards from the open market this week onwards, according to bank sources. During the consolidation phase, the bank will only service specific requests for credit cards and not solicit customers.
“We never stopped open-market sourcing. For some time now, we have opted to grow selectively. We continue to offer cards to customers with a good profile and track record,” said Bahl.
In a departure from its earlier policy, the bank introduced co-branded credit cards last year. “Earlier, our thinking was that the HSBC credit card brand is strong and we should not dilute its value by co-branding. However, seeing the success of co-branded credit cards, we decided to introduce our own cards,” said a senior executive at the bank.
Among foreign banks, HSBC was one of the hardest hit by the downturn, reporting a loss of $219 million (about Rs 1,007 crore) on its consumer banking portfolio in 2009.
Standard Chartered Bank, the second largest foreign lender in the country by assets, reported an operating profit of Rs 248.4 crore from its consumer banking division in 2009.
Citigroup’s non-banking finance company, Citi Financial, reported a loss of Rs 729 crore for the year ended March 31, 2009.
HSBC saw stress on its consumer banking book even before the onset of the economic downturn in India. It reported a retail banking loss of $70 million in 2007. The loss widened to $155 million and $219 million in 2008 and 2009, respectively.
In 2009, loan impairment charges on consumer banking at the global level rose 9 per cent to $649 million, mainly due to rising delinquencies in unsecured consumer lending businesses in India and Indonesia.
“The delinquencies in India began to moderate in the second half of 2009 as measures implemented by HSBC in the second half of 2008 to mitigate loan losses, including ceasing consumer finance loan origination and tightening lending criteria on other unsecured lending products, began to take effect,” HSBC had said in its 2009 Annual Report.