Focusing strongly on emerging markets, Standard Chartered has managed to grow its business amidst turbulent times. Speaking to FE?s Sitanshu Swain and Mahalakshmi Hariharan, Standard Chartered Bank?s group finance director Richard Meddings threw some light on the group?s strategies for the Indian market. Excerpts:
What are your plans for the Indian space?
Our main focus will be on segments like mortgages, personal loans, savings accounts, investment products, credit cards and private banking operations. We will continue to make investments in deepening our product base in India. We have a very strong relationship with corporate India and remain committed towards the future of India. Our credit portfolio in India is very good with no pressures.
What is the basis of your IDR pricing?
The price to earnings ratio for Standard Chartered is valued at 14 times in the London market. At the same time, HDFC is valued at 31.7 times, ICICI Bank at 26 times while Axis Bank at 21 times. So, we feel there is a lot of scope and attraction from this IDR. We are listed in London and Hong Kong so far. India will be the third one.
We got listed in HongKong in 2002. Going forward, we will look at getting listed in Shanghai. But everything depends on regulatory approval. There is no time frame for now. We would work with the regulators there for listing. The India listing is more of a brand business exercise than a capital raising one. We are well-capitalised and strong in India.
How is your business diversified across the globe?
Almost 20% of our profits come from the Indian market while 14% from African countries. Today, we are present in 70 countries. In Asia, we are present in Hongkong, Malaysia, Singapore, Thailand and Indonesia, apart from India. In most of the countries, we are present for over 100 years.
We are one of the largest dollar clearing entities in the world. Our head office is in Europe. Only 10% of our profits are generated from America and Europe. About 90% of our profits is from Asia. We don?t bank with international companies for their domestic needs. We don?t lend to UK companies. But we provide funds to UK companies which have businesses in Asia, Africa, West Asia and India. Basically, we are not interested in a domestic local bank. We will always continue to improve the quality of products and develop the same. Our corporate finance globally grew 74% last year out of business like corporate advisory, project and structured finance. The group has about $35 billion of capital. Our capital adequacy ratio is at 16.50% and market capitalisation stands at $50 billion.
How does the bank make so much of profit in India with so few branches?
We work closely with a lot of companies in India. We have four customer segments, multinationals and local corporates that serve Indian companies. We have thousands of local corporates in India. We also bank with financial institutions and are a bank for many Indian banks. Indian banks are our customers. We have also diversified ourselves into commodities and provide trade finances.
Overseas investors who are interested to use the Standard Chartered platform to enter the Indian markets are looking at exploring sectors like coal mining, diamond and jewellery and construction. The growth looks pretty strong.
Did you get hurt by the ongoing European turmoil due to Greek crisis?
We let this kind of volatility bring us more business. We don?t do propriety business. We offer commercial transactions. When it?s volatile, the appetite for risk protection goes up. This kind of volatility has helped us increase our volume of business. Last year, the sterling devalued by about 40% against the dollar. While we do have some exposures to Spain, that?s just meagre. We do not have any kind of exposure to Greece and Portuguese.
Are you looking at inorganic growth in India?
Recently, we bought UTI Securities. The regulations don?t allow us to acquire a bank. We can take only 5% stake in Indian banks and companies. But then, we clearly like India and it?s an important market for us.
What would you do with the IDR money?
It?s for our general global business. You can say it?s just a brand building exercise in India. Last year, we were one of the largest tax payers in India. The profit remains with our branch. Had it been a subsidiary, we could have taken the profit to our headquarter.