With stronger balance sheet, IndusInd keen on acquisitions

The Hindujas-controlled IndusInd Bank, which has witnessed a sharp turnaround in fortunes over the past few years, is keen on acquisitions.

IndusInd managing director and CEO Romesh Sobti told Entrepreneur in an interview that the bank now has “acquisition currency” and hence is ready to grow through the inorganic route. Sobti, who took charge of IndusInd in 2008 when the bank was virtually an also-ran, has now converted IndusInd into a strong, mid-sized bank hungry for growth and innovation.

“The market capitalization of the bank today is around Rs 22,000 crore. It’s grown in the past four and a half years. Besides, we also have management currency. So we’re suitors,” Sobti said. The bank now has a balance sheet footage of close to Rs 70,000 crore as of the third quarter of FY13.

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The bank turned in a smart 30 percent growth in net profits in the third quarter of FY13, with the profits at Rs 267 crore.

[caption id=“attachment_601267” align=“alignleft” width=“380”]  Representational Image of a bank counter. Reuters[/caption]

However, while IndusInd is keen on acquisitions, Sobti admits there aren’t too many candidates on offer. “There’s just a clutch of banks, out of south India and most want to carve their own destiny still. If it becomes a reality then suddenly we’re a strong suitor. But we’re not a seller. We have very deep-pocketed promoters,” he added. The Hindujas, he said, were keen on the financial services business and were happy that the bank had now acquired scale and was growing well.

“They (the promoters) take pride in this that one of the clutch of companies has created value,” Sobti said.

IndusInd, he said, had adopted the strategy of ‘responsive innovation’, which means that the bank would offer what the customers desire without them having to ask for the services. The Choice Money ATMs, where customers can select the denominations of the notes at IndusInd Bank ATMs. This innovation, he said, was a ‘global first’ and reflected the bank’s mindset on offering products which customers could tag it with. “Today we’re not a high street brand and we don’t even claim to be. But may be, in the next three to five years, we will be,” he said.

The bank, which filled up some product gaps by buying the credit cards business of Deutsche Bank and tying up with HDFC for selling home loan products, is now set to introduce gold loans over the next three months.

On the next phase of the bank’s growth, Sobti said the post-2014 plan would take into account the possibility of more new banks entering the system. “But I do feel the whole fresh licensing story is slightly overplayed,” he added. “If you were a Singapore with 30 banks and a limited population and the cake’s not growing, you’d worry. Here the cake is growing. Here you’re part of a market which is expanding by 10-20 percent.”