The Hindu Business Line : Big bucks come from corporate portfolios

RETAIL banking may be the buzzword for banks but the big bucks still come from corporate/wholesale banking going by the segmental revenues of five new private banks for the fiscal ended March 2002. Banks are required to give a break-up of their revenue and profit streams in corporate/retail/treasury and other heads from this year on.

Three of the five new private banks - HDFC Bank, IDBI Bank and IndusInd earned 46 per cent of their income from corporate banking. UTI bank's income from corporate banking was just a shade lower at 44 per cent while for ICICI Bank it was at 40 per cent.

The two banks which earned a significant part of their income from retail business were HDFC Bank - 42 per cent and ICICI Bank at 38 per cent respectively.

In the case of ICICI Bank, the figures pertain to those of the bank alone (before its merger with ICICI). The retail portfolio, incidentally, accounts for 8 per cent of the combined balance sheet of ICICI and ICICI Bank.

The fiscal 2001-02 was the year when gilt yields nose-dived and consequently helped boost treasury portfolios. UTI Bank, ICICI Bank and IDBI Bank earned nearly 40 per cent of their incomes from treasury. HDFC Bank seemed to rely less on treasury income which contributed around 25 per cent, in view of its strong retail and corporate base.

Banks revealed their segmental revenues for the first time in the October-December quarter of the last fiscal. When queried about the relatively lower contribution of retail business, HDFC Bank's Managing Director, Aditya Puri told Business Line that the retail business takes a couple of years to stabilise in view of the investments in infrastructure - branches, staff, ATMs, branches, brand building and customer acquisition costs. That seems to have been borne out by the results of IDBI Bank which has made a loss of Rs.50.40 crores on its retail business. IDBI Bank shifted its focus to retail after Mr.Gunit Chadha took over as Managing Director,in mid 2000. Similarly UTI Bank also changed gears after the arrival of Mr.P.J.Nayak as Managing Director.

Others such as HDFC Bank and ICICI Bank had a headstart as they had begun to shift focus on retail more than three years ago.

Banks may however see retail rake in the big bucks this year as the investments in infrastructure made earlier begins to pay off.

Treasury gains may be more muted as yields are at historic lows while profits on corporate portfolio remains hostage to an elusive economic recovery.

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