Assets of foreign banks flourish in 2022

File photo

Foreign banks with a presence in India experienced a financially healthy 2022, their assets rising to new heights compared to previous years.

The Indian Banks Association (IBA) said that compared to 2021, assets of major foreign banks increased in 2022.

Citinbank’s assets rose to Rs 2.33 lakh crore in 2022 from Rs 2.17 lakh crore in 2021 and Rs 2.18 lakh crore in 2020. German bank Deutsche Bank’s assets rose to Rs 1.47 lakh crore in 2022 from Rs 1.30 lakh crore in 2021 and Rs 1.21 lakh crore in 2020.

JPMorgan Chase’s assets rose to Rs 90,874 crore in 2022 from Rs 77,151 crore in 2021 and Rs 92,504 crore in 2020.

Experts said that with time, foreign banks in India, which used to focus on niche segments, are now consolidating and reworking their strategies and exploring new opportunities available in different markets.

“In India, post COVID-19, foreign banks are trying to grow their books by investing in various sectors,” said Karan Gupta, banking analyst with Fitch Ratings.

Commercial banking  

Citibank is diversifying its deposits capacity by luring retail investors. Recently, the bank announced a maximum interest rate of 7.25 percent on deposits that mature in 181 to 400 days.

Additionally, senior citizens will get a maximum interest rate of 7.75 percent on deposits with maturities between 181 and 400 days.

JPMorgan Chase Bank India is expanding its interests in commercial banking practice and local mid-cap companies.

“Over the last three years, we have expanded our commercial banking business to serve local mid-cap companies in India, and we believe this business will scale significantly,” Madhav Kalyan, Chief Executive Officer (CEO), JPMorgan Chase Bank India and Senior Country Officer, said in a report.

In July 2022, Deutsche Bank Group launched its IFSC Banking Unit or IBU in Gujarat’s GIFT City, the country’s first International Financial Services Centre (IFSC).

“Deutsche Bank proposes to commence its business in Gift City with credit facilities for corporate clients and will provide a suite of products across Trade Finance, Fixed Income & Currencies initially. In addition, within the framework of extant guidelines, it will facilitate cash pooling and other deposit propositions for Indian and international clients,” the bank said in a statement.

Sanjay Agarwal, senior director, CareEdge Ratings, said that post-COVID, the growth rate of commercial banks has substantially increased and they have become good options for investors.

“The asset quality of many commercial banks is on an uptick and this makes them an attractive option for foreign banks to invest,” he said.

Sectoral diversification 

The Micro, Small and Medium Enterprises (MSME) segment has seen the entry of these banks to help them grow in terms of business volume and reach.

These foreign banks have sectors like multinational corporations (MNCs), top conglomerates, investment banking, cross-border services for foreign investors, structured finance and even new-age sectors, considering the growing number of unicorns in India.

“Various sectors have got a boost as banks are lending more due to a drop in their non-performing assets (NPAs). Also, the lending process has become smoother which has facilitated sectors to borrow more money,” Agarwal said.

JPMorgan Chase is making investments in the payments and transaction banking sector to widen its digitization in order to facilitate its MNC and e-commerce clients.

“When we consider the investment and expansion strategies of major foreign banks in India, they would focus on sectors that would require them to provide shorter term loans. Lending in pharmaceutical, chemical, non-banking financial companies (NBFC) and automobiles are sectors where they are focusing on,” said Gupta.