HSBC Holdings PLC says it has ambitious plans to export the business model of its recently acquired U.S. consumer finance unit, Household International, to several other countries.
"Over the medium term we plan to take Household's platform of consumer lending and credit cards on a global basis," Stephen Green, the Anglo-American banking giant's chief executive, said in a briefing Monday with journalists in Hong Kong.
Replicating Household's credit-scoring systems overseas will take time, but its business line offers great possibilities, Mr. Green said. "Demographics are such that consumer finance works well in emerging markets."
Mexico will be the "nearest priority," though HSBC also plans to start using aspects of the Household system in France, India, Brazil, and Hong Kong, Mr. Green said.
"We have had an active dialogue between our card business here in Hong Kong - where we have 2 million cards - and Household," he said. "We want to [export] Household's systems and credit-scoring environment, which is a sophisticated business."
HSBC, whose three main areas of operations are consumer finance, investment banking, and commercial banking, is also looking at Eastern Europe, where its operations are small.
"We've applied for a banking license in Poland," Mr. Green said. "There are some countries where we're looking that we don't have a geographic footprint."
Synergies from the Household purchase will reach about $1 billion, according to HSBC estimates.
Mr. Green said he expects consumer finance to continue to make up most of HSBC's future profits. Personal financial services, including Household's businesses, generated 45% of the parent's first-half pretax profit, compared with 36% a year earlier, it reported last week.
"The personal financial business is one we want to grow," he said. "With Household, it makes up the biggest segment of our operations and will make up our biggest profits in future."
Overall pretax profit rose 21% in the first half, to $6.11 billion, mainly because of HSBC's $14.2 billion purchase of Household in November and its $1.1 billion acquisition of the Mexican bank Grupo Financiero Bital last August.
Bad debt provisions more than tripled, to $2.37 billion. About $1.5 billion of that came from the U.S. customers acquired through Household, which lends to higher-risk consumers.
"Of course, with Household in the group, bad debts will be higher," Mr. Green said. "That is the nature of the consumer business, but Household remains an attractive business."
