Striking a correct balance

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: By crafting a selective business strategy—low on cost and high on productivity— Bank of America is thriving to be one of the best foreign banks in the country.

In India, the bank operates various businesses like investment banking, global product services, debt capital markets, risk management, cash management and treasury services. The bank also conducts international trade settlements, remittances and clearing accounts for major Indian banks like ICICI Bank, State Bank of India and HDFC Bank.

Vishwavir Ahuja, who has been heading Bank of America’s Indian operations as managing director and chief executive officer for the last 15 years, attributes the success of the bank to a strict adherence of a zero default system. The bank in India deals with the top 200 companies in India and 50 banks and financial institutions.

“We do a very careful assessment of the company before entering into a deal with the company. To do the same, we have a highly skilled workforce in place, who are well groomed from the time they are hired by the bank. They are given all the necessary exposure to do their jobs well and work closely with senior managers,” says Ahuja.

The bank doesn’t deal with top ranking Indian corporates, as in some criteria they fall short of bank’s credit risk assessment. Interestingly, during the year ended March 31, 2008, the bank has reported higher employee efficiency levels with a continued effort to deliver business growth. The business per employee grew from Rs 19.2 crore in 2007 to Rs 24.8 crore in 2008. Profit per employee also improved to Rs 1.02 crore from Rs 0.69 crore in FY 2007. The bank has about 320 employees in India.

Net profit for the year ended March 31, 2008, grew by 56% to Rs 305.2 crore from Rs 195.5 crore a year ago. The improvement in net profit was a consequence of higher revenues, marginal decline in interest cost, despite increased volumes, while operating costs were controlled, thereby resulting in better earnings margins.

The bank has continued to report nil net non-performing assets (NPAs), which is attributable to the quality of its loan portfolio, solid client selection systems and robust credit appraisal processes that the bank has in place for managing its lending book. “Our zero NPA business can be attributed to our strong risk management practices and a multi layered scrutiny team,” observes Ahuja.