The Hindu Business Line : GE Money puts growth ahead of profits here

Mumbai, Feb. 15 Consumer finance major, GE Money, is hoping to achieve higher growth, even at the cost of lower profits. Speaking to Business Line Mr Yoshiaki Fujimori, President and CEO, GE Money Asia, said the company is hoping for 50 per cent growth for the next five years in India.

“Profitability is the flip side of investment. Even if we sacrifice profit, we would like to continue with investment,” he said.

Mr Fujimori said the over 8 per cent GDP growth in India and the well-developed financial markets here in comparison with other emerging countries, were the reasons for huge business growth in the country.

GE Money Financial Services Ltd, the wholly owned Indian subsidiary, is at present in consumer loans segment such as personal loans, mortgages, credit cards and auto loans. The non-banking financial company (NBFC) reported a profit after tax of Rs 10 crore on a total income of Rs 96,000 crore in financial year 2006-07, as against PAT of Rs 50 crore and a total income Rs 790 crore in 2005-06. India currently accounts for just 1 per cent or $2 billion of the company’s total asset base of about $200 billion.

As the market grows, GE Money may also look at entering the banking space in India, Mr Fujimori said.

Looking for partners

The company is also looking to sell stake in its personal finance and mortgage businesses and is even comfortable with a minority stake. The process could take about six months.

“We are looking for partners who will bring local market expertise as well as brand value. We can provide product expertise and underwriting risk management. We don’t mind being minority partners and are totally flexible right now,” he said.

An analyst at a rating agency, said, “GE Money has shown higher credit losses in some segments, but this has been across other players as well. The company is trying to optimise its capital and return on equity over a longer term. In the short-term, they are changing their strategy and building on franchise rather than returns. They are looking for a partner who will offer them this franchise.”

Partnerships

The NBFC is also looking for partnerships with the big global retailers that would be entering India to offer reward programmes and credit cards, Mr Fujimori said.

In India, it currently has a joint venture with State Bank of India for credit cards and with Wizard for home loans. It has also announced a joint venture with LIC for credit cards, which could take about 9-10 months, said Mr Iqbal Singh, President and CEO, GE Money, India.

Growth strategy

Joint venture partnerships have been GE Money’s strategy for growth in Asia and the company is keen on following the same model in India as well.

It has a partnership with Hyundai for credit cards in Korea and in Thailand, the company has joint venture with the Bank of Ayudhya for credit cards.

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GE Money puts growth ahead of profits here