In a financial twist, India has become the unexpected star in HSBC’s profit galaxy, surpassing China and securing its position as the third-largest profitable region for the Hong Kong and Shanghai Banking Corp Ltd (HSBC) in 2023.
The financial giant revealed a 25 per cent surge in profit from its India operations, reaching an impressive $1.5 billion for the fiscal year ending December 2023.
This shift marks a significant leap for India, considering it generated a profit of $1.2 billion in 2022.
The annual report from HSBC unveiled key insights into the factors driving India’s stellar performance.
One of the pivotal contributors was a notable reduction in anticipated credit loss provisions, dropping from $90 million in 2022 to $51 million in 2023.
The global banking and markets segment emerged as HSBC’s primary revenue source in India, boasting a robust 24 per cent profit increase to $774 million in 2023 from $622 million the previous year.
Additionally, the commercial banking sector, catering to small and medium enterprises (SMEs), witnessed a remarkable 31 per cent surge in pre-tax profit, reaching $398 million.
HSBC’s positive outlook for India stems from its recognition of the nation’s economic potential.
The bank highlighted that India, along with Vietnam, is among the fastest-growing economies globally, benefiting from competitive labour costs, supportive policies, and evolving supply chains.
With 42,000 employees in India operations, HSBC predicts that the economies of South and Southeast Asia will carry strong economic momentum into 2024.
The contrasting fortunes of India and China in HSBC’s financial landscape become even more apparent when comparing their profit trajectories.
While India soared with a 25 per cent profit increase, China experienced an 89 per cent decline in profit, plummeting from $3.40 billion in 2022 to a mere $371 million in 2023.
This drastic shift in China’s financial standing was attributed to losses incurred in wealth management, personal banking, and corporate centre verticals.
HSBC, recognising the potential for further growth, aims to bolster its wholesale franchise by tapping into corporate supply chains in India.
The bank is also capitalising on the wealth pools of the Indian diaspora with the launch of onshore Global Private Banking.
With an optimistic outlook, HSBC envisions the economies of south and southeast Asia, particularly India and Vietnam, continuing to thrive in 2024, driven by competitive labour costs, supportive policies, and dynamic supply chains.