Mumbai: Chanda Kochhar has taken over as chief executive of India’s biggest private sector lender, ICICI Bank Ltd, from K.V. Kamath. Kochhar spoke on a host of issues to CNBC-TV18. Edited excerpts:
Straight talk: ICICI Bank chief executive Chanda Kochhar. Bloomberg
Congratulations for this big day when you become in-charge of a Rs4 lakh crore balance sheet. What is the first thought that comes to the mind when you get this kind of power?
Well, I think more than power, I get a whole lot of responsibilities through this role. The thought that comes to my mind is that this is an organization which has been very successful in the past and it’s my responsibility now to actually see that along with my team I not just preserve the legacy but take it to greater heights.
If you have to look from now to the next three-five years, what do you think will be under your watch?
Well, you know as an organization we believed in growth, innovation and empowerment and so on.... I think the DNA of the organization will continue to remain the same, but the dimensions of growth, innovations and empowerment have to really be adapted to the current environment. So, I would say growth has many dimensions; it’s not just the balance sheet growth. You need to look at how you grow the ROE (return on equity) from here, you need to look at how you grow your low-cost deposits from here, you need to look at how you grow the branch network and make it even bigger, so there would be various aspects of growth which are more relevant to the current environment.
Will there not be contrary pressures because you want to control costs and yet grow branches? Will both be possible?
That’s the hallmark of a great organization. The past one year’s experience has shown us that we have kind of started moving on that path. We have increased the number of branches last year and yet did not grow costs. I think if we continue to follow that same focus and approach, we will manage these two seemingly contradictory objectives.
Will you be able to repeat what you did in FY09 in terms of branch expansion and cost control?
Yes, because our intention is to add another 580 branches this year and clearly the focus will stay on to control costs.
How much more do you think your retail book will contract?
More than contracting, I think what I would focus on is to say that... we would continue to be strong in those products, like mortgages, car loans and so on. On the other hand, products like small-ticket personal loans (and) other unsecured loans are not suited for the current economic environment, so we would not be doing those kind of products. So, instead of putting a number to our total retail portfolio, I am putting a strategy to say these are products that make a lot of sense, we will continue to be aggressive, some we would not do.
Your retail business as a percentage of your total book has come down by a few percentage points. Will that happen this year also?
It may happen.... On the other hand, on the corporate side you would see investments coming back over a period, you would see a greater activity there, so I think the proportions between retail and corporate (loans) will adjust as we go forward.
Another hallmark of the last five or six years has been that you have become an increasingly international bank. Would you be internationalized for some time?
I would again say that the growth rates in our international books would be very different than what they have been in the past. In the past, we have been growing in 50-60% (range) and so on. But currently, if you just see even our Indian corporate (firms), their entire global strategy is kind of much more moderate. So, the growth rates in that book are going to be much smaller, much more muted that what they have been in the past. But otherwise, our focus has always been that we look at the Indian corporate (sector) and their global requirements and that’s essentially what we are going to keep focussing on.
A hallmark of the era gone by was capital. ICICI Bank was known to be nimble to raise capital whenever the market gave you the opportunity. Will that also be one of your watchwords?
Of course, because I think for a financial institution, capital is the most important raw material. So we have to be nimble and raise capital ahead of time. We have believed in that and we will continue to do so in the future. Having said that, I think as of now, we have sufficient capital to take us through for some time, not just for the bank but even to fund the growth of the subsidiary companies. So, immediately in the near future we don’t need capital, but yes, as the DNA of an organization, I think capital is one of the most important raw material for us.
You had a bit of a dollar funding gap and some of your international commitments are coming due. Is that tided over or are you still looking for money?
No, I think we are a bank and I think we have been managing our assets and liabilities in a very, very seamless manner, even in the last year when the global markets were so difficult. We will continue to do so as we go forward. I think we have some repayment coming up out of our bonds and debt issuances but we also have repayments coming back in the form of term loans. Also, even as we speak today, we have a healthy flow of deposits coming in, in our various locations, whether it’s Singapore, the UK, Canada and so on. So I think we are continuing to manage very comfortable liquidity in our international operations. I don’t see any cause of concern of liquidity even in the year ahead.
Looking forward, what’s the big growth area for ICICI Bank?
I think the first important part of making profits would be to strengthen our net interest margin, which means we grow our branch network, we focus on our low-cost deposits and improve the CASA (current and savings accounts) ratio and improve our net interest margin. That’s going to be our first thing that will contribute (to) our ROA (return on assets). The second thing would be to really focus on more recurring forms of the income, which means get more into transaction banking, into current accounts and the regular working capital transaction banking kind of businesses. These are going to be two kinds which will contribute now, and as and when the investment, etc., comes back into the economy, we are going to ride that growth.