Kidwai targets $1 billion in profits

In an economy growing at a blistering pace, CEOs need to be constantly on their toes. It seems to be the same for HSBC’s Group General Manager and Country Head, India, Naina Lal Kidwai. She is clear that while HSBC has gained in recent years from overall economic buoyancy, it has to grow faster.

“India is a rising tide which lifts all boats,” says Kidwai, echoing global sentiment about India. HSBC’s Indian operations reported a 64 per cent rise in net profits for year ended March 2007 to Rs 846 crore; now, she’s setting the bar much higher. The bank is targeting a $1 billion (Rs 4,100 crore) in pre-tax profits in India within the next five years.

“With a growth rate of at least 30 per cent (a year), we should be there quite quickly,” she adds. But for that, India has to deliver. Kidwai is not too worried about this. “Overall, GDP growth is very strong. I don’t think that is going away. If we start with that premise, then the rest of it is really about tweaking the margins,” says Kidwai.

Though she concedes that the rising rupee and the other escalating costs such as salaries have the potential to derail the India story, she still feels it is not just about costs. “Yes, gaps are narrowing. So we will go wherever there are cheaper labour markets, but can you really get the same volume that you get in India anywhere else?”

Hence, Kidwai’s message to her colleagues is simple: “It is not enough to just grow because everybody grows; it is important to grow more than everyone else. We have to keep garnering market share.” Organic growth is the only option available to foreign banks at least till 2009 when there could be a regulatory review of the present norms which restrict their inorganic growth in India. But then, Kidwai points out that HSBC has not exercised the inorganic option in the asset management business, where there are no such restrictions.

With the India story remaining strong, competition naturally is hotting up, not just from local banks, but also from HSBC’s global peers. HSBC is taking nimble steps in areas such as commercial banking, consumer finance and insurance.