Mumbai:
HSBC Holdings PLC plans to relaunch its Indian private banking business within a year, India’s CEO told Reuters on Thursday, after the Asia-focused lender identified the country as a key strategic market for growth.
HSBC exited the Indian private banking business in 2015 as part of a group strategy. The lucrative but highly competitive Indian market has few foreign players in a segment that focuses on high net worth individuals.
The London-headquartered bank is preparing to relaunch the business in India at a time when it increasingly focuses on Asia, which is the largest region in terms of profit generation, with Greater China and India as its main markets.
“We see the amount of wealth creation in India and the growth in the number of millionaires… so a decision in principle has been made to reintroduce private banking in India,” said Hitendra Dave, CEO of HSBC India.
“We are going through the process of internal approvals and it could take six to 12 months and will include a full range of private banking products,” he said in an interview.
Currently, HSBC focuses on catering to wealthy Indians from its global hubs in Singapore, London and the Middle East.
Nuno Matos, HSBC’s global CEO of wealth and personal banking, which also includes its private banking business, told Reuters in November last year that the bank was looking into re-entering onshore private banking in India.
HSBC earned just over half of its revenue and about two-thirds of its reported pre-tax profit in 2021 from Asia. It has increased its focus on Asia by relocating global executives and putting billions of dollars into its lucrative asset management business.
The bank also aims to quadruple its customer base in India across various business segments in the next three to five years, Dave said, taking advantage of some foreign rivals who are downsizing their businesses and increasing wealth in the country.
HSBC India’s pre-tax profit rose 9% to $1.11 billion in 2021 from $1.02 billion in 2020, led by a 42% growth in revenue from its commercial banking operations, which include medium and small businesses.
“Over the years, the group has invested $4.5 billion in the country. In recent years we have managed to grow without needing additional capital and may continue to do so for the foreseeable future,” said Dave .
The lender agreed last year to purchase the mutual fund arm of L&T Finance Holdings in India for $425 million, and also plans to increase its stake in the insurance joint venture.
“HSBC has identified India as one of its key strategic markets and we have tremendous potential for organic growth, but we can also look to inorganic growth when an opportunity presents itself,” said India’s CEO.
(Reporting by Nupur Anand; editing by Sumeet Chatterjee and David Evans)