ING Vysya Bank to focus on secured lending

ING Vysya Bank's year-on-year advances have grown 24 per cent as of September 2010, and it hopes to grow faster than the market. “For the last couple of quarters, we are beginning to grow now faster than the market on the loan side, driven by the flagship product — SME advances,” Mr Uday Sareen, Country Head – Retail Banking, ING Vysya Bank, told Business Line . On the deposit side, the bank believes there is a lot of headroom available for further improvement of CASA (current account savings account). Excerpts:

How has the year been for the bank so far?

On the deposit side, the focus was on building low-cost deposit base. We are beginning to grow as our footprint is getting national, new branches and clearing growing CASA is a priority. As of September, the first half – there has been improved numbers on the CASA side at about 35.6 per cent. Four to five quarters ago, it used to be in the mid-20s. At a core balance sheet level, it would be at about 33.5-34 per cent.

There continues to be a lot of headroom available for further improvement, and we want to look at growing this opportunity. All the strategies that we have in terms of new products, branches or offerings are driven towards that we have an opportunity to increase our low-cost deposit base. That's a positive. We want to be increasingly relevant to the customer. On the loan side of the business, clearly the focus for the bank has been on the secured lending businesses. Our flagship business has been on the business banking side, which we understand well and have scaled up well. As of September, business banking – SME business – was up 40 per cent year on year in terms of the outstanding exposure that we have. Pan-bank, it is 25 per cent of the asset book and growing.

Our objective, as we articulated at the beginning of the year, was that we want to grow faster than the market. What we will grow at is really the function of the market. The first-half growth for the industry is expected to be 16-17 per cent year on year. Last quarter, we have grown our asset book sequentially by 7 per cent, and year-on-year that number is 24 per cent. For the last couple of quarters, we are beginning to grow now faster than the market on the loan side, driven by the flagship product. We are also growing on the home loan side; that business is growing at 23-24 per cent (as of the September quarter).

Apart from that, staying with the theme of secured lending products, we launched our commercial vehicle business at select centres in the South, and that is starting to pick up now. We are also looking at gold loans, even in the cities. There is a lot of wealth that can get unlocked with just gold as collateral. We have a large network in the South, and we are doing some pilots there. So, that's a focus area for us.

What is your outlook for credit offtake in the second half of this fiscal and the next fiscal?

Clearly from what we have seen in the last couple of quarters, we have seen a sequential growth of seven per cent in the second quarter. In the SME business, where we are focussed on businesses focussed on domestic consumption, there is a pick up in credit. We are also investing in it and scaling it up. Our growth rates are clearly high in the last two quarters than the preceding two quarters. We are seeing positive growth and traction on the retail side.

As a bank we are committed to growing faster than the market. Our year-on-year advances are up 24 per cent, which I think is at least 6-7 per cent faster than market. That is including 3G, which we didn't have any exposure on. So, if you strip off 3G, H1 over H1 is more like 15-16 per cent, where as we grew 24 per cent.

We have clearly identified segments, and we want to make sure we grow that.

What about personal loans?

We had, but stopped couple of years ago. We have a small book — 1.5 per cent of the asset book. Traditionally, we have not had a large unsecured exposure.

The opportunity clearly exists, since we have a large customer base. If there is a requirement from a customer, we would be looking at something like that, may be from the next quarter.

How many new customers are you adding now every month?

On an average in a month we are adding 30,000-35,000 new customers. From that perspective, it has been a good year, and with the new branches and with the traction, we are beginning to generate almost equal number of business from outside the South too as we did in the South.

How many branches in the South vis-à-vis outside?

As on September 30, we had 489 branches totally, out of which close to 65 per cent is in the South. A lot of the incremental growth is coming from outside the South. This year, we have got approval for 58 new licences. And of these, 17-18 have been already opened. By March-April 2011, we will be finishing most of our new licences. Of the new licences, 54 are outside the South, which was by design. We have a lot of network already in the South, and we want to increase our presence outside the South.

This year has been a momentous year for the banking industry in terms of new regulations like base rate, daily savings regime, etc. What has been the impact?

The base rate increases transparency. There is no change in the rate as such; it is just in the communication and articulation of what the customer rate constitutes was the key driver. There was no change in the upward or downward because it was the base rate. It is good for the consumer and the industry, and we have implemented it as all other banks. This provides clarity and more transparency.

On the daily savings regime, the interest rate to customer clearly went up. On that front, there is an impact on the margins. But overall, it has resulted in people growing their savings accounts. There would be an impact on the margins depending on what the savings book is. But overall it is a positive.

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