HSBC outpaces market on back of SME loans | Economic Times

Mumbai: Hong Kong and Shanghai Banking Corp’s (HSBC) India corporate loan book has grown at a compounded rate of 16% in the last five years led by a tripling in loans to small and medium enterprises (SMEs).The UK-based lender expects to continue outpacing the market on the back of demand from emerging sectors like commercial real estate, renewable energy and consumption-led industries, head of commercial banking, Rajat Verma said in an interview.The bank’s SME loan book has tripled to $1 billion from $300 million in 2018 as Verma has expanded the bank’s presence around its 26 branches in India. Verma said the bank is open to expanding its book even though many foreign bank peers have limited their operations in India.“I don’t want to stop here. It’s a book we have built client by client, city by city and sector by sector... In the last five years, our asset growth has been strong. We will continue to grow faster than the market,” said Verma, who as head of the commercial banking business deals with companies with an annual turnover ranging from $3 million to $5 billion.Global results released earlier this month showed HSBC’s profit before tax in India fell to $529 million in the six months ended June 2021 from $561 million a year earlier, largely as the wealth management and personal banking division swung to a loss and profits from the bank's corporate centre, which gives services to the bank globally, fell sharply.Profit from the commercial banking division rose 76% to $146 million from $83 million a year ago and was also higher than the $104 million profit reported in calendar 2020.Verma said profit from the bank’s commercial banking division has grown at a compounded rate of 23% in the last five years, led by a steady 20% growth in revenues.“If you have invested and have a relationship and understanding of those sectors, you can still grow. I am bullish on consumption for a very long time with nuances within that. There are emerging sectors like renewables, chemical processing, pharmaceuticals and sectors linked to consumption. I am comfortable with commercial real estate and reasonably comfortable with residential,” he said.Verma acknowledged that the bank has seen a rise in stress especially with SMEs, which were badly hit due to the Covid-19. However, the pre-emptive expected credit loss (ECL) provisions that the bank took were enough to deal with the stress, which is now abating, he said.