Plans branch in Sri Lanka, subsidiary in London
Axis Bank, India's third largest private sector lender, intends to scale up its international banking operations. The bank presently has branches in Hong Kong, Singapore and Dubai and representative offices in Abu Dhabi and Shanghai.
"We are looking to convert our representative office in Shanghai into a full-fledged branch. Besides, we will also be opening a branch in Sri Lanka and a subsidiary in London”, Shikha Sharma, managing director and chief executive officer, Axis Bank told Business Standard.
On the hardening of interest rates, she said, given the current global situation and inflationary pressure, the high interest regime will continue to stay for sometime and Reserve Bank of India (RBI) may further raise the repo rates in the future.
The bank, meanwhile, is undeterred by the almost flat growth in Net Interest Income (NII) and dip in Net Interest Margin (NIM) in the last quarter of 2010-11, the bank is targeting a long-term NIM of 3-3.5 per cent.
"Our NIM declined by 36 basis points in the January-March quarter of the previous fiscal. There has been a sudden tightening of liquidity and some of the margin gains had to be given up. The bank's NIM had posted a growth of 20 basis points in the October-December quarter of 2010-11 and on a long-term basis, we are eyeing a NIM of 3-3.5 per cent. The rising cost of funds is not a cause of concern and we should watch NIM on a year-on-year basis”, she said.
Though the bank's net profit for the quarter ended March 31 this year jumped by 33.5 per cent at Rs 1,020 crore, its NIM fell to 3.44 per cent from 4.09 per cent in the year ago quarter.
Asked on the growth targets in terms of total business, Sharma said, the banking industry has been growing at the rate of 18-20 per cent year-on-year and we should be able to grow faster than the industry average.
The bank is also looking to diversify into investment banking post acquisition of Enam Financial, one of the leading financial services firms in the country.
"The acquisition of Enam Financial is meant for plugging our capability gap. Axis Bank already has an in-principle approval of the Reserve Bank of India (RBI) for the acquisition but the process needs a series of other approvals. Axis Bank has an asset management company and now we will have an investment bank. Both Enam and Axis Bank are strong brands and we would leverage both the brands to lend a distinct identity to the investment bank”, said Sharma.
Axis Bank's plan to foray into investment banking is a part of the bank's aim to figure in the list of Top 50 financial institutions by 2015.
"Currently, we are ranked 89th among all the financial institutions in the world. Axis Bank is in a very good position to be among the Top 50 financial institutions across the globe as we are operating in India which is one of the fastest growing economies. Presently, we are the fourth largest bank in the country in terms of market capitalization and ninth as far as balance sheet is concerned”, she said.
Commenting on the bank's performance in Orissa, Sharma said, “We have a very significant presence in Orissa having 51 branches in the state. Axis Bank's overall lending in Orissa has already crossed Rs 2000 crore which includes Rs 760 crore of credit flow to SME (Small and Medium Enterprise) and rural sectors. We believe that a lot of growth in the state will come from the infrastructure and steel sector and Axis Bank is set to play a crucial role in the growth story”.
The bank has also evinced interest in facilitating wage payments under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) as well as pension payments through smart cards.
“Axis Bank has presented a proposal to make payments for MGNREGA and pension payments through smart cards. We have welcomed the bank's proposal”, said Jugal Kishore Mohapatra, principal secretary (finance), Orissa government.