Latest news with #JoelRebello
Economic Times
6 days ago
- Business
- Economic Times
Citi India has capital buffer to last 2 years after retail exit: K Balasubramanian
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Citigroup's exit from retail banking in India has helped it strengthen its corporate operations in the country, K Balasubramanian, the bank's head for the India subcontinent, told Joel Rebello and Sangita Mehta in an interview. Balasubramanian said he is bullish about the bank's growth prospects in the country. Edited excerpts:In March 2023 we gained about ₹11,000 crore from the divestment. But after adjusting for those gains, revenue showed a 28% rise in two years-from ₹17,314 crore to ₹22,173 crore. Similarly, profit after tax after adjusting for one-time gain rose from ₹4,700 crore to ₹6,193 crore, up 32% over two years (₹6,237 crore in FY24). Total assets, after the divestment, rose from ₹2.17 lakh crore to ₹2.70 lakh crore at the end of March 2025, an increase of 25% (₹2.59 lakh crore in FY24). So, as part of our strategy, we have created capacity in a segment where we believe we will grow the best, which is corporate business. That's what we are now leveraging to grow. The bank's loan book rose by 45% from ₹50,000 crore to ₹72,000 crore. Deposits also rose 36%-from ₹1.47 lakh crore to ₹1.99 lakh we quit retail, we were going to double down on the institutional business. In transaction banking, we have over 8% market share, despite not being present in oil and defence. The government's Viksit Bharat vision needs between $3 trillion and $4 trillion capital to be invested in India; there is not enough firepower within India to fund this capex. This money is going to come from the FDI and FII routes. Therefore, on the FDI side, one in four foreign companies that are present in India bank with us, while on the FII side, it is one in three. In foreign exchange, we have early-teens market share. In the ECM business, we have done reasonably well. The pipeline between now and the end of 2025 continues to be strong. If we look at the pipeline between now and at the end of the year, assuming the markets hold, we got a high single-digit billion dollar-plus IPOs which will see the light of the At the end of the day, capital is finite and I have to use the same capital for my retail business as well as on the institutional side of the business. With the retail exit, that capital was available for institutional business. Every year, 25% of our annual profit gets accreted into capital here and the balance 75% we remit. In FY24, we capitalised ₹2,100 crore from the gain made from the consumer business sale. Our capital adequacy was between 18% and 20%. Right now, we are 20.3% despite this growth, which means that we have created a buffer for at least the next two years. Citi India is close to Jane Fraser, the CEO of the bank. We are probably among the top three countries globally for her in terms of investments and would grow at 10% in dollar terms which is 15% in rupees. Strong capital markets and advisory are going to be a big positive. Securitisation will continue to be focus because returns are accretive. Commercial real estate business will grow rapidly and I won't be surprised if that book increases to $600 million in one year from $200 million now. We are looking at participating in big-ticket items the government is focused on-energy transition or renewable energy. We also launched EMCT (emerging market credit trading), wherein we invest in listed debt instruments issued by top-rated corporates. We have built a $650 million book and it can go to $1 is available. Ability to take risks is much better today, because we don't have consumers. We are fully focused on further building our institutional capabilities. And that's exactly what is playing out in the last 24 top 7-10 conglomerates in India are sitting on $10 billion of capex. Every large group has plans to invest in energy is putting up new giga factories; Tata is looking at renewable capacity creation and semiconductor, electronics. JSW is into energy transition and battery technologies.L&T is getting into battery technologies in a very material way. In the last 5-7 years, the government is spending on infrastructure in a material way, unlike the last 15 to 20 years. The nature of capex is changing. We are probably going through the best time in terms of corporate balance sheets, as well as bank balance sheets in our life. Even government banks are sitting on significant cushion of capital, so they are able to lend money for government have 14 branches from 34 before the Axis Bank deal. I don't think we will look at expanding anything significantly beyond launched securitisation of loans three years ago. It has risen from $200 million before retail exit to $1 billion. This helps in growing the fee and balance sheets. We started lending to commercial real estate, which is a Rs 1,400-crore book now, from zero two years ago. It is secured lending against either assets or portfolio receipts from different companies. We also provide loans to medium and small enterprises under commercial banking business, which grew by over 20% where the spreads are very corporate banking, we have worked with almost all the large companies, including the Tatas and when we had consumer banking, it was run as two separate units—consumers used to raise deposits for their assets. Corporate banking unit borrowed money from the consumer unit at arm's length transfer price. So, we were never reliant on the consumer deposit. The 36% market share on FII is a counter for the deposit example, in the HDB IPO, the street collected Rs 80,000-Rs 90,000 crore. We got Rs 30,000 crore of deposit float for 7-8 days. We are also working with development financial institutions to help India get access to newer ports of capital at competitive rates. They do 80% of the financing and we do 20% of the financing. We are on the shorter run of the covers; they take the longer run of the cup. It is 7-19 years. That book is also growing quite nicely.
Time of India
6 days ago
- Business
- Time of India
Citi India has capital buffer to last 2 years after retail exit: K Balasubramanian
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Citigroup's exit from retail banking in India has helped it strengthen its corporate operations in the country, K Balasubramanian, the bank's head for the India subcontinent, told Joel Rebello and Sangita Mehta in an interview. Balasubramanian said he is bullish about the bank's growth prospects in the country. Edited excerpts:In March 2023 we gained about ₹11,000 crore from the divestment. But after adjusting for those gains, revenue showed a 28% rise in two years-from ₹17,314 crore to ₹22,173 crore. Similarly, profit after tax after adjusting for one-time gain rose from ₹4,700 crore to ₹6,193 crore, up 32% over two years (₹6,237 crore in FY24). Total assets, after the divestment, rose from ₹2.17 lakh crore to ₹2.70 lakh crore at the end of March 2025, an increase of 25% (₹2.59 lakh crore in FY24). So, as part of our strategy, we have created capacity in a segment where we believe we will grow the best, which is corporate business. That's what we are now leveraging to grow. The bank's loan book rose by 45% from ₹50,000 crore to ₹72,000 crore. Deposits also rose 36%-from ₹1.47 lakh crore to ₹1.99 lakh we quit retail, we were going to double down on the institutional business. In transaction banking, we have over 8% market share, despite not being present in oil and defence. The government's Viksit Bharat vision needs between $3 trillion and $4 trillion capital to be invested in India; there is not enough firepower within India to fund this capex. This money is going to come from the FDI and FII routes. Therefore, on the FDI side, one in four foreign companies that are present in India bank with us, while on the FII side, it is one in three. In foreign exchange, we have early-teens market share. In the ECM business, we have done reasonably well. The pipeline between now and the end of 2025 continues to be strong. If we look at the pipeline between now and at the end of the year, assuming the markets hold, we got a high single-digit billion dollar-plus IPOs which will see the light of the At the end of the day, capital is finite and I have to use the same capital for my retail business as well as on the institutional side of the business. With the retail exit, that capital was available for institutional business. Every year, 25% of our annual profit gets accreted into capital here and the balance 75% we remit. In FY24, we capitalised ₹2,100 crore from the gain made from the consumer business sale. Our capital adequacy was between 18% and 20%. Right now, we are 20.3% despite this growth, which means that we have created a buffer for at least the next two years. Citi India is close to Jane Fraser, the CEO of the bank. We are probably among the top three countries globally for her in terms of investments and would grow at 10% in dollar terms which is 15% in rupees. Strong capital markets and advisory are going to be a big positive. Securitisation will continue to be focus because returns are accretive. Commercial real estate business will grow rapidly and I won't be surprised if that book increases to $600 million in one year from $200 million now. We are looking at participating in big-ticket items the government is focused on-energy transition or renewable energy. We also launched EMCT (emerging market credit trading), wherein we invest in listed debt instruments issued by top-rated corporates. We have built a $650 million book and it can go to $1 is available. Ability to take risks is much better today, because we don't have consumers. We are fully focused on further building our institutional capabilities. And that's exactly what is playing out in the last 24 top 7-10 conglomerates in India are sitting on $10 billion of capex. Every large group has plans to invest in energy is putting up new giga factories; Tata is looking at renewable capacity creation and semiconductor, electronics. JSW is into energy transition and battery technologies.L&T is getting into battery technologies in a very material way. In the last 5-7 years, the government is spending on infrastructure in a material way, unlike the last 15 to 20 years. The nature of capex is changing. We are probably going through the best time in terms of corporate balance sheets, as well as bank balance sheets in our life. Even government banks are sitting on significant cushion of capital, so they are able to lend money for government have 14 branches from 34 before the Axis Bank deal. I don't think we will look at expanding anything significantly beyond launched securitisation of loans three years ago. It has risen from $200 million before retail exit to $1 billion. This helps in growing the fee and balance sheets. We started lending to commercial real estate, which is a Rs 1,400-crore book now, from zero two years ago. It is secured lending against either assets or portfolio receipts from different companies. We also provide loans to medium and small enterprises under commercial banking business, which grew by over 20% where the spreads are very corporate banking, we have worked with almost all the large companies, including the Tatas and when we had consumer banking, it was run as two separate units—consumers used to raise deposits for their assets. Corporate banking unit borrowed money from the consumer unit at arm's length transfer price. So, we were never reliant on the consumer deposit. The 36% market share on FII is a counter for the deposit example, in the HDB IPO, the street collected Rs 80,000-Rs 90,000 crore. We got Rs 30,000 crore of deposit float for 7-8 days. We are also working with development financial institutions to help India get access to newer ports of capital at competitive rates. They do 80% of the financing and we do 20% of the financing. We are on the shorter run of the covers; they take the longer run of the cup. It is 7-19 years. That book is also growing quite nicely.
Economic Times
06-07-2025
- Business
- Economic Times
There is scope for a 25-bps repo cut in 2025... RBI will look at data, aid growth, says SBI MD Rama Mohan Rao Amara
Agencies Rama Mohan Rao Amara Surplus liquidity is a 'pleasant problem' for State Bank of India (SBI), Rama Mohan Rao Amara, MD, International Banking, Global Markets and Treasury, tells ET's Joel Rebello and Sangita Mehta. He oversees a ₹66-lakh-crore balance sheet at India's most-valued government lender as head of its treasury. SBI expects another quarter-point reduction in policy rate this calendar year, Amara acknowledged that mobilising deposits is a tough task when depositors look for higher returns in a falling interest rate scenario, even as geopolitics, digital fraud and imported inflation remain key risks. What are the practical challenges that banks face after the unexpected cuts in repo and CRR? It is a pleasant problem to have from a situation of running into a deficit only a few months ago. A lot of credit goes to the Reserve Bank of India (RBI) that from a deficit, we have moved to a system-level surplus with ₹9 lakh crore of durable liquidity. Short term rates are plummeting after the cuts. The change in stance by the RBI (to neutral) was surprising, indicating long-term rates are here to stay and this has led to a steepening of the curve. For a long time, long-term yield was almost flat and in certain sections inverted. We expect the short term rates to still come down further, with the long term moving sideways. We expect the ten year to be in a broad range of 6.1% to 6.4% and the rupee to be in the ₹84 to ₹86 per dollar range. How do you expect rate cuts to be transmitted to the broader loan books? The transmission is still playing out. Year after year, loans linked to EBLR (External Benchmark Linked Lending Rate) have increased. The portfolio which is linked to MCLR (Marginal Cost Based Lending Rate) and other rates will slowly witness the transmission. So when transmission is complete, if inflation plays out as expected, the RBI may look at the data points and definitely there is further scope for a 25 basis point cut in repo this calendar year, and that is our house view also. What could be the triggers for another cut? Favourable factors like a normal monsoon-and certainty on the trade front. These are all triggers for them (RBI) to take a call. It gives them room or the manoeuvrability to aid the growth as well. I think the next decision on rate cut will be more data based. The front loading has given them enough time to observe how the system is behaving. So they will have the benefit of looking at the data, and of course, they will take measures to aid the growth. With the banking system flush with liquidity, how low can deposit rates fall for banks to keep attracting customers? It's been a challenge for the last few quarters. Every bank is prioritising deposit growth in face of competition from mutual funds or the insurance companies. Banks have to adopt a multi-pronged approach in improving customer engagement, creating innovative products which is possible thanks to technology advancement and use of AI-ML. You have to customise and even with a hyper personalisation where you make the right offer at the right time to a customer. That kind of hyper personalisation is possible thanks to technology advancement and use of AI-ML. You have to sweat all your channels, retail franchise, digital channel, or third party ecosystem. Individuals also will have a propensity to lock into the fixed deposit rates now anticipating a decline in the interest interest rates declining, corporates are shifting to bonds. How are banks protecting margins?We have an active treasury looking for opportunities. We have an active corporate investment book, though not comparable to the loan book growth. On margins, we are working on two fronts, wherever opportunities are there, we invest in the corporate investments short term, and also working on how to reduce deposit costs. SBI has already announced QIP plans. Are there any fundraising plans through infra bonds or tier two bonds for this year? As on date, the total outstanding infrastructure bonds with SBI is ₹69,718 crore. We have a sizeable infra book to support infra bonds. But if we feel like that net of all the costs, that is a much cheaper option, we will go for it. Last year, we saw a record dollar fund raise. Given the expected decline in the Fed rate and hedging costs, will corporates still be interested in dollar bonds? The difference between the dollar and rupee 10 year G sec has narrowed to 1.8% versus 3% a few quarters ago. Ample liquidity will incentivise corporates to tap the domestic market. For the ECB, without a natural hedge you are running into risks. But some NBFCs want to diversify their resource base, so they will be looking at ECB. But as on date, if you ask me, there is a more incentive for the corporates to tap into their domestic rupee because of ample liquidity. The RBI's biggest concern is breakdowns of IT infrastructure by financial institutions. Given SBI's size, how are they navigating these risk and compliance challenges IT? Tech resilience definitely occupies our mind space even at the board level, whether we are doing enough. For a customer, the system should be available 24X7 without any disruption and reduced unscheduled downtime. It is complex, given the legacy systems and dependencies on various vendors and the fintechs. We have created a Resiliency Operation Centre to observe the behaviour of the systems, or hardware or servers, or behaviour of applications. The aim is to anticipate the problem much before it occurs. So it is more like a proactive observability of various systems which we work on.
Time of India
06-07-2025
- Business
- Time of India
There is scope for a 25-bps repo cut in 2025... RBI will look at data, aid growth, says SBI MD Rama Mohan Rao Amara
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Surplus liquidity is a 'pleasant problem' for State Bank of India (SBI), Rama Mohan Rao Amara, MD, International Banking, Global Markets and Treasury, tells ET's Joel Rebello and Sangita Mehta. He oversees a ₹66-lakh-crore balance sheet at India's most-valued government lender as head of its treasury. SBI expects another quarter-point reduction in policy rate this calendar year, Amara acknowledged that mobilising deposits is a tough task when depositors look for higher returns in a falling interest rate scenario, even as geopolitics, digital fraud and imported inflation remain key is a pleasant problem to have from a situation of running into a deficit only a few months ago. A lot of credit goes to the Reserve Bank of India (RBI) that from a deficit, we have moved to a system-level surplus with ₹9 lakh crore of durable liquidity. Short term rates are plummeting after the cuts. The change in stance by the RBI (to neutral) was surprising, indicating long-term rates are here to stay and this has led to a steepening of the curve. For a long time, long-term yield was almost flat and in certain sections inverted. We expect the short term rates to still come down further, with the long term moving sideways. We expect the ten year to be in a broad range of 6.1% to 6.4% and the rupee to be in the ₹84 to ₹86 per dollar transmission is still playing out. Year after year, loans linked to EBLR ( External Benchmark Linked Lending Rate ) have increased. The portfolio which is linked to MCLR (Marginal Cost Based Lending Rate) and other rates will slowly witness the transmission. So when transmission is complete, if inflation plays out as expected, the RBI may look at the data points and definitely there is further scope for a 25 basis point cut in repo this calendar year, and that is our house view factors like a normal monsoon-and certainty on the trade front. These are all triggers for them (RBI) to take a call. It gives them room or the manoeuvrability to aid the growth as well. I think the next decision on rate cut will be more data based. The front loading has given them enough time to observe how the system is behaving. So they will have the benefit of looking at the data, and of course, they will take measures to aid the been a challenge for the last few quarters. Every bank is prioritising deposit growth in face of competition from mutual funds or the insurance companies. Banks have to adopt a multi-pronged approach in improving customer engagement, creating innovative products which is possible thanks to technology advancement and use of AI-ML. You have to customise and even with a hyper personalisation where you make the right offer at the right time to a customer. That kind of hyper personalisation is possible thanks to technology advancement and use of AI-ML. You have to sweat all your channels, retail franchise, digital channel, or third party ecosystem. Individuals also will have a propensity to lock into the fixed deposit rates now anticipating a decline in the interest have an active treasury looking for opportunities. We have an active corporate investment book, though not comparable to the loan book growth. On margins, we are working on two fronts, wherever opportunities are there, we invest in the corporate investments short term, and also working on how to reduce deposit on date, the total outstanding infrastructure bonds with SBI is ₹69,718 crore. We have a sizeable infra book to support infra bonds. But if we feel like that net of all the costs, that is a much cheaper option, we will go for difference between the dollar and rupee 10 year G sec has narrowed to 1.8% versus 3% a few quarters ago. Ample liquidity will incentivise corporates to tap the domestic market. For the ECB, without a natural hedge you are running into risks. But some NBFCs want to diversify their resource base, so they will be looking at ECB. But as on date, if you ask me, there is a more incentive for the corporates to tap into their domestic rupee because of ample resilience definitely occupies our mind space even at the board level, whether we are doing enough. For a customer, the system should be available 24X7 without any disruption and reduced unscheduled downtime. It is complex, given the legacy systems and dependencies on various vendors and the fintechs. We have created a Resiliency Operation Centre to observe the behaviour of the systems, or hardware or servers, or behaviour of applications. The aim is to anticipate the problem much before it occurs. So it is more like a proactive observability of various systems which we work on.
Economic Times
13-06-2025
- Business
- Economic Times
ET Exclusive: Global shocks won't alter our plans for India, says Masahiro Kihara, CEO Mizuho Financial Group
India's demographic advantages, GDP expansion and opportunity to broaden exports make it an important growth engine for Mizuho Financial Group, says Masahiro Kihara, chief executive of Japan's third-largest megabank with $1.9 trillion in assets. The group is constantly evaluating opportunities for investment and lending in India, and plans to double the headcount at its global capability centre here, he tells Joel Rebello and Sangita Mehta. Edited excerpts: What is driving Japanese interest in India? The future of India is very promising. From a demographic perspective, you have a lot of advantages. Besides wages, the working age population is still increasing, which is totally opposite from Japan. You have a stable democratic framework with robust digital infra. And beyond that you are inducing people to come and make in India (with) start-up India, production-based incentives and so on. The Japanese are looking for areas where they can grow. So, India is a very promising area. Also, Japan and India have a long-standing relationship sharing the same values, having sympathy towards each other. So, that gives Japanese companies confidence to invest here. Where does India fit into Mizuho's plans? There are 1,400 Japanese companies operating here and we bank with many of them. Many of these want to expand here. But there is also interest among Japanese companies to come here for the first time. We want to be supportive of the growth of Indian and Japanese companies. Also, we want to commit to the growth of India because both countries have been friends for many years. So, for us, India is a very important country. In November 2023, we increased our capital base to $500 million, so that our Indian operation can extend more lending. Are you likely to make more investments in India?I think at some point, we probably will need additional capital to inject here. And I'm happy to do that if there's a need for that. What would be the trigger for you to inject more capital? We have (invested) $500 million and based on the needs that we get from our customers I think it's sufficient right now. But as this country grows, I guess there will be much more for companies asking for lending. Any acquisitions that you're looking at in India? First of all, in terms of organic, we focus on five business areas: Japanese retail; asset management and wealth management in Japan; Japanese corporates; global corporate investment banking and sustainability. We are constantly looking at opportunities in these areas. So, I can't allude to what will happen in India. There have been reports about Mizuho acquiring a majority stake in Avendus Capital. What is the status? I can't allude to that. No comments. Will corporate banking continue to be your focus in India? We are particularly very good at corporate wholesale banking. In the global space, I think we should stick to wholesale banking because regional retail banking is very difficult. Wholesale banking is the area where we have expertise, we have strength. Given the global uncertainties in terms of rates, markets, trade and political tensions, what is your view on growth? Of course, there's a lot of uncertainties but at some point things will get clear. Then everybody will start adjusting to a new world order. So, I would say given that there's uncertainty from a global perspective, the activity might be slow. But once things get clear, activity will come back. Does it change the way you invest in India or will you have to relook at your plans here? I think India is a little bit insulated from all these things. I would say that India is a bit of a different story. Very different from Japan. So, we won't change what we were going to do in India. What would be the impact of the US tariff war on India? The effect on India is probably minimal. You might even benefit from production moving into India from other countries, given the fact that maybe the tariff rate is lower than the other countries. What is happening is that corporations are thinking of diversifying their supply chain from a stability perspective. Everybody is thinking about moving into areas that have growth potential. So, India is in a good position from that perspective. What advantages do you think India has over China? In the long run, the working age population, I think that's the most important part. For India it is going to grow. China is going to decrease. That's a big advantage. What are your plans on the global capability centre in India? We have around 600 people and we want to double that in two or three years and move in more and more operations here in India because India has a talent pool. Which are the sectors you're very optimistic about? In India there is ambition to grow in manufacturing from auto electronics, semiconductors and infrastructure. Increasingly, when the per capita (income) goes up, there should be increasing demand for retail too. India is constructing airports, highways, railroads. We have done many projects in the infrastructure sector. We have also beefed up the project finance team recently. The top 3 Japanese banks are here in India with deep pockets. How would you differentiate between yourselves and them? We at Mizuho are very good at industry research. We have a very strong global corporate and investment banking franchise, developed from 2015 when we purchased assets from RBS and onboarded 100 relationship managers. We want to integrate every capability that we need in the investment bank inside our bank, to get synergies between those capabilities. Based on these strengths, we'll try to bring all these capabilities into India too, and I think we can be competitive on them.
