HSBC India can aspire to be among top five private banks, says CEO Hitendra Dave

HSBC India CEO Hitendra Dave

HSBC India is in a leadership position in the franchise it has created in India, CEO Hitendra Dave has told Moneycontrol in an exclusive conversation on what lies ahead for the bank. Emphasising that wealth management and international and corporate proposition will be the key drivers of HSBC India, Dave said the bank can aspire to be among the top five private banks in terms of scale despite its global bank tag. Edited excerpts:

HSBC India has become a significant contributor in terms of profitability to the global bank. How has the year been for HSBC in India so far?

The banking system in India right now is on a rising tide. As the famous saying by Warren Buffett goes, it's only when the tide goes down that we will discover who was making losses.

At this juncture, despite the spike in microfinance and unsecured loans resulting in credit losses, (the situation is) very manageable. Some banks have had challenges around deposit growth versus credit growth but that partly was due to the tight liquidity.

India is a land of wonderful opportunity, and it is very tempting to behave like a kid in a candy store. We, in the executive management team of HSBC India, feel good that we stuck to our strategy. We have chosen customers where HSBC is able to deliver greater value than other banks, and where our organisation globally is available to those customers. This could be people sending their kids abroad to study, companies setting up sourcing units and so on. Largely it’s globally oriented corporates and globally oriented individuals. We have a wealth and premier proposition, which is the best in class.

It has been almost three years since Citi withdrew from India’s retail market. At HSBC, has it turned out to be an incremental opportunity?

Any NRI around the world who wants to relocate to India and any Indian who wants to go abroad or wants to have some wealth abroad (are potential clients) and this is HSBC India’s strength.

We are not a hustle sales team because we want to have multi-generational relationships. Irrespective of whether other banks have quit or not quit India, we find that the number of people who need internationalism from a bank in India and the number of people who have become wealthy is increasing. We are doubling down on our premier proposition, which is the unique proposition, in India.

The mutual fund business we bought from L&T, now called HSBC Mutual Fund, has done wonderfully well. I would encourage viewers to look at how our schemes have done compared to competitors.

With this kind of franchise we have across our wealth, international proposition and corporate proposition, we can be that one international bank aspiring to be at a scale like a top five private bank.

Do you think the regulatory burden is too high in India?

HSBC works in more than 60 countries. You cannot impose (from a regulatory perspective) that this is how I work in the UK, or this is how I work in Singapore. There is a reason why in the long history of the bank we've never had a bailout unlike a lot of other banks with great reputations in the media who have been bailed out every 10-15 years. We don't want to be in that situation.

How are things looking for corporate banking?

The key here is good customer selection. They can have ups and downs in their business cycles but they cannot have ups and downs in their governance. We find companies that we can trust. You can bank with their employees, vendors, channel partners, dealers, distributors, etc. HSBC is the largest corporate bank in the world. We are also big as a trade bank. It's a business we are quite proud of what we have achieved and delivered.

This is not specific to HSBC but true for anyone selling wealth management products. Are relationship managers incentivised if they sense something wrong about a high-value client or report on such a something customer?

We have to ensure that messaging on culture is right. I keep telling people that the number one job of the CEO is to set the right tone on the culture and reinforce the right culture. If you bring in a business which has compromised HSBC values, I don't want that business. In most organisations, there is a direct linkage to the number of insurance policies sold, etc. We don't have a single product like that. It's much more holistic on a relationship basis, including service quality, longevity of the customer, amount of adverse customer feedback that comes about and so on.