(MENAFN-Khaleej Times) Indian bank to make Hong Kong, Singapore foray; over 2,000 branches eyed
The leading Indian bank, which has been instrumental in shaping the country’s financial infrastructure and driving industrial growth, will soon make a foray into Hong Kong and Singapore and open more than 800 branches across its home country.
IDBI Bank is pursuing an aggressive plan to expand its operations in domestic and international markets for sustainable growth in years to come, its top official says.
The leading Indian bank, which has been instrumental in shaping the country’s financial infrastructure and driving industrial growth, will soon make a foray into Hong Kong and Singapore and open more than 800 branches across its home country.
“We will be entering the Hong Kong market in financial year 2014-15 and then foray into the Singapore banking circles,” M.S. Raghavan, chairman and managing director of IDBI Bank, told Khaleej Times in an interview during his recent visit to Dubai.
The Mumbai-based lender, which will be celebrating its 50th anniversary and completing its first decade as a full-service bank this year, is the youngest new generation public sector bank. The Indian government holds 76.5 per cent equity stake in the bank, which has 1,201 branches — including an overseas office in Dubai — and 2,073 automated teller machines at 816 locations across India.
“IDBI was formed as a development financial institution [DFI] in 1964 and up to September 2004 it was the top-most DFI in India. In October 2004, the bank secured a licence to operate as a full-service commercial bank and with a couple of mergers in the next three years it went through various phases and faced formidable challenges before emerging as a strong banking unit in the past six years,” Raghavan said. He said the bank has done “reasonably well in a short span of time and remains ahead of its strong and established competitors in the country”.
“I can see very good days ahead for IDBI and it will be among the top five lenders of India in the next 10 years,” he added.
About expanding its domestic operations, he said the bank has chalked out a plan under which its branch network will cross the 2,000 mark by June 2015. “We are executing a plan to open 300 branches in financial year 2013-14 and another 400 in the next fiscal. The remaining 100 branches will be operational in the first quarter of fiscal 2015-16,” he said.International expansion
Raghavan said the bank’s only overseas branch is based at the Dubai International Financial Centre, or DIFC, and he would like to explore other markets in the region.
“We made the UAE foray in 2009 with the opening of the DIFC branch, which has performed remarkably well in the past five years,” he said, adding that the bank is keen to expand its presence in the UAE and the GCC region — Saudi Arabia and Qatar in particular — over a period of time.
“The DIFC branch has been able to ramp up its international portfolio significantly as the overall business size is about $3 billion and the balance sheet is touching about $4 billion,” he said.
He said the bank sees a lot of prospects in the UAE and the region will become a “very high-potential” zone in the coming years.
“We value our relationship with the UAE and consider it a strategic trade partner. We opened our DIFC branch in 2009 when sentiment was down in the wake of the global financial crisis and this reflects IDBI’s confidence in this region.”
He said securing the rights to host World Expo 2020 is a big achievement for the UAE and he sees huge business opportunities for the bank. “We will be in touch with the regulator to secure a licence to offer full-banking services to our customers,” he added.
To a question about exploring neighbouring countries — Pakistan and Myanmar — for cross-border operations, he said the two nations hold exponentially good business prospects and IDBI may enter these markets at the appropriate time.
“We set our eyes on Singapore, Hong Kong, GCC and some other places to boost the bank’s portfolio in international markets. But I think if we are presented with an opportunity we would like to be in these places [Pakistan and Myanmar],” he said.Q4 performance
Raghavan said the bank would deliver better results in the fourth quarter and conclude the 2013-14 financial year in March on a positive note.
“The fourth-quarter earnings will be better than the third quarter as the Indian economy is stabilising after touching lows in the recent past,” he said. The bank’s third-quarter earnings plunged 75 per cent while nine-month profit tumbled by 54 per cent due to increased provisioning for non-performing loans and investments, as well as slowdown in the Indian economy.
“Indian gross domestic growth stood at 4.7 per cent in the third quarter while the industry showed negative growth, which impacted IDBI’s profits,” he said, adding that the economy had hit the lowest and now it will move only in an upward direction.
“We can see a revival in investments and the next 10 years will be good for India and the banking industry. The next 10 years will again be defined by infrastructure, corporate and industrial growth. I see very good days for IDBI,” he said.
To a question, he said the forthcoming general elections will not have any negative impact on the economy and banks, however it will be a “lull period” because the government will not be able to take any policy action and the industries and corporate sector may face additional stress in the coming five to six months.
“When a stable government comes and settles down then things will start improving on the economic front and ultimately it would impact the banks positively.”
To a question, Raghavan said tapering of the US Federal Reserve is good for the global economy as it ended “an uncertainty element”, which is good for markets. “India is now better prepared to face the Fed tapering,” he said.
In reply to another question, he said the bank is not in a hurry to offload its stakes in Care Ratings and other holdings.
“We have strategic investments in several companies and we are looking at opportunities to unlock values only at good returns,” Raghavan concluded.
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