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SBI eyes profitable expansion outside India, to open more branches in Nepal

India's top lender, with assets of more than $500 billion, was catapulted into the league of the top 50 global banks this year

Reuters  |  Mumbai 

SBI net down 20%, NPAs worsen

of (SBI) will open more branches in and consider options to re-enter Vietnam under a three-year goal to grow its operations to as much as 15 percent of total business, a senior executive said.

India's top lender, with assets of more than $500 billion, was catapulted into the league of the top 50 global this year after it merged five subsidiary with itself.

But mergers and acquisitions are expected to play only a tiny role as seeks to ramp up growth in the overseas business, which now makes up about 11 percent of all operations. Instead, it will rely on organic growth and ensure profitability is not forsaken.

SBI, which is present in 35 countries but has more than half of its 206 offices in Asia, aims to increase the number of offices in neighbouring to 100 in the next one year from 88 currently to better tap a market it considers "under-penetrated" for banking, said Siddhartha Sengupta, a deputy managing director who leads the bank's business.

The Indian government majority-owned is also looking at options to re-enter Vietnam, where it closed its office long ago, possibly through a partnership, Sengupta said, noting the Vietnamese economy, and trade between the Southeast Asian nation and India, were growing rapidly.

"We had an Asian focus. But we are trying to make that focus sharper," Sengupta said in an interview with Reuters.

"In terms of inorganic growth, whatever our aspirations are would be far smaller compared to what we have seen in the domestic market. We have a limited dollar balance sheet."

The Indian lender's overseas push comes at a time when rivals in China, Japan and Southeast Asia are expanding outside their home nations and have made far deeper inroads into Asia, often through M&As.

SBI's overseas growth plan also comes at a tricky time for lenders who have been burdened with a record $146 billion in bad loans.

Sengupta said the overseas growth would be in a "risk-mitigated" fashion and not at the cost of profitability. The expansion may not lead to a substantial rise in the total number of offices as is also shutting unprofitable ones, he said.

Siddharth Purohit, an analyst with Mumbai's SMC Institutional Equities, said it was prudent for to be choosy in growing its exposure.

"Some other Indian have reduced their exposure recently, one reason being their main clients, the Indian corporates, are also going slow on overseas acquisitions and the focus is on cutting debt at home."

As part of its plan, is aiming to partner with Japanese regional to offer products and services for small- and medium-sized companies there that plan to set up manufacturing base in to cater to big Japanese companies including automakers in

The will also step up its offerings in neighbouring Bangladesh and Sri Lanka, Sengupta said, adding plans to pursue more collaboration and syndication opportunities at the annual meeting of the Asian Bankers Association it is hosting in next week.

expects a new subsidiary that will house its retail operations in the United Kingdom to begin functioning in January-March 2018, Sengupta said.

First Published: Thu, November 09 2017. 16:28 IST