After taking charge as ING Vysya Bankâs managing director and chief executive officer last year, Shailendra Bhandari has accelerated the growth momentum. In an interview to Shilpy Sinha, he says this will have to be kept up. Edited excerpts:
How will the rating downgrade impact ING Vysya?
The downgrade by Fitch is on assumption of withdrawal of support from ING. From what we have experienced in the past eight years of our association, ING has steadfastly continued its support. In the last three capital-raising exercises, ING participated fully and invested incrementally to maintain its equity at 44 per cent. With the group increasing focus on banking operations and its repeated emphasis on Asia, including India, the support will continue. We do not see the downgrade impacting the business.
The bank has accelerated growth. What has been your strategy?
ING took over Vysya in 2002 and I took over only last year. I have done very little; a lot of hard work was done by the team. We needed to step on the gas and accelerate momentum on all the building blocks put in place.
When I joined, I said our aspiration would be to grow faster than the market. Our deposits have grown 16-17 per cent, advances 26 per cent, while CASA (current and savings accounts) ratio was 27 per cent at the end of September. Similarly, our NIM (net interest margin) has gone up by 2.8 per cent to 3.3 per cent. Net NPAs (non-performing assets) have halved from around 1.7 per cent to 0.8 per cent. Our provision coverage ratio has doubled from 36 per cent to 72.75 per cent. It is early to say, but growth with quality is happening.
The banking industry is abuzz with mergers and acquisitions, especially of South-based banks. Are you looking at one?
We have heard rumours about us buying a bank and also us being sold. There is nothing like that. It is very early.
When will you be ready to take over a bank?
We need to do two-three things before we look into the matter. We need to prove this (growth) is not a flash in the pan and is sustainable. Second, if one would at all look at an inorganic transaction, we would again need to prove to ourselves that if we can grow at 26-27 per cent on our own, would we add fundamental value by doing something beyond that?
How do you plan to sustain these growth numbers?
We keep innovating. We went through source searching and joined hands with Angel Broking for a strategic tie-up. In the immediate term, this tie-up may not help us to augment our fee-income, but it helps to complete the bouquet of services. Next, we would like to get into credit cards on our own.
ING had said it was moving back to basics. What is the progress?
ING had announced this at the beginning of last year. The market has understood this as a focus on the European countries, and within Europe, the Benelux countries.
ING, however, later clarified that it was not only the European countries. There were certain key markets in Asia on which theyâd continue to focus. They specifically mentioned three banks â Bank of Beijing, where they have 16 per cent stake; TMB in Thailand, where they have 44-45 per cent stake; and ING Vysya, where they have 44 per cent stake. After that announcement, we did a qualified institutional placement in which ING participated. So, it remains committed to India.
Is ING going to sell its insurance business?
ING did not say so. It said by 2012, it would split insurance and bank globally. At present, they are a single holding company. Going forward, there will be some split, possibly an initial public offer (IPO). To that extent, India will be part of the IPO and the Indian business will not be sold.
What does ING mean, then, by moving back to basics?
To distance itself from fancy investment banking. We are moving away from large income from a particular deal but looking at a stream of income, taking a more conservative approach.
What are your expectations on credit growth? What should RBI do to further ease liquidity?
Credit growth will be sustained at the 20 per cent level projected by the regulator. The recent measures by the regulator should ease liquidity in the short term to facilitate credit growth. Incremental CDR (credit deposit ratio) has been moderating. But with revival of investments and IPO funding, the position should ease.
What is your view on the base rate?
Many banks would like to increase base rate. We will revise ours and other lending rates in the next quarter.