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Our Bureau

`Vigorous growth in personal loans led to a change in mix'

MR ROMESH SOBTI, Country Executive-India, ABN-Amro.

Mumbai May 3 ABN-Amro Bank India has realigned its retail loan portfolio in favour of unsecured loans.

Mr Romesh Sobti, Country Executive-India, ABN-Amro, said the dominant driver in the retail portfolio was unsecured loans (personal loans and credit card loans) at 70 per cent with the balance being secured loans comprising home and auto loans.

"Three years ago, auto and home loans dominated our portfolio. But the vigorous growth in personal loans and the scaling down of auto loans have led to a change in the mix," said Mr Sobti.

He said the higher risk on unsecured loans also meant higher rewards, as long as the bank had an appropriate risk-based pricing policy. The bank had shifted its focus from the home-loan segment as there was unhealthy competition with interest rates falling.

"The rise in interest rates on home loans now has meant that the margins are healthy and we will re-enter the segment," he added. The retail business contributes 65 per cent of the bank's revenue.

BPO unit

On the UK-based Barclays bid for ABN-Amro Bank, Mr Sobti declined to make any comment. ABN-Amro India has around 28 branches and around 3,400 employees. The bank's BPO, which is the largest outsourcing unit for ABN-Amro globally, has 4,000 employees and handles a whole range of operations related to trading, global markets and mortgage business.

Mr Sobti said globally, ABN-Amro's Indian branch was a dominant player in the Asian region and showed rapid growth in terms of revenue and profitability.

New credit card

The bank on Thursday launched a new credit card "ABN-Amro One". The card offers cash-back of up to two per cent on spends across categories. The cash-back feature is neither time-bound nor confined to any particular purchase category.

The interest rate on the card ranges between 2.95 per cent and 3.15 per cent per month.

"The average spend for an ABN-Amro credit card holder is 40-50 per cent higher than the market average of Rs 2,200-2,300," Mr Sobti said.

ABN-Amro estimates India's credit card base will jump from 21 million to 50 million by 2010.

Around 80 per cent card customers, however, still favour the debit card over the credit card.

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