All articles by Douglas Blakey
Douglas Blakey
India gets its third m-bank this year
First it was ICICI in January, then Standard Chartered in February; now Barclays has launched a mobile phone-based banking service for the Indian mass market In a vast country with limited internet infrastructure and relatively understrength branch networks (ICICI, the largest private sector player, has just 955 branches and 3,687 ATMs), the mobile channel is being rapidly exploited as a cheap means of communication and distribution Barclays is making its service, called Hello Money, available in both Hindi and English through all GSM handsets on the Airtel, Vodafone and Idea mobile networks in 40 Indian cities, and says it will look to extend the service to CDMA handsets in the future
Prot outlines two-year goals for BNP
Baudouin Prot, CEO of BNP Paribas which earlier in February announced a 7 percent rise in annual profits to a record 7.82 billion ($11.9 billion) has said that by 2010 he wants his bank to win more than 6 million new retail banking customers, to have 10 percent of retail sales made online and to open 600 branches (bringing the group to 5,600).The targets are part of a two-year plan announced by Prot on 20 February to grow BNP Paribass domestic and global franchise No mention was made of purchasing stricken French rival Socit Gnrale though Prot has said he might be interested in acquiring some of HSBCs French business if the UK group decides to sell (on 29 February, it was reported that HSBC had begun exclusive discussions with Frances Banque Fdrale des Banques Populaires regarding a sale of some of its French subsidiaries, having received an offer of 2.1 billion).Other goals include annual revenue growth of at least 10 percent per year on average, and 15 percent of group revenues sourced in emerging markets by 2010
Choppy US loan market cuts into Lending Tree
LendingTree.com, one of the largest and best-known US online lending exchanges, has reported a huge loss of $536.4 million for fiscal year 2007 another high-profile casualty of the ailing mortgage market in the US.Revenue in the fourth quarter fell by 55 percent to $52.1 million compared with $115.4 million in the previous year (see table), primarily due to fewer loans sold and lower revenue per loan sold; revenue from all home loan products declined, with home equity declining the most quickly Profits were also impacted on by higher costs per loan sold resulting from lower close rates and stricter underwriting criteria, partially offset by lower marketing expenses.The operating loss includes a $475.7 million impairment charge related to goodwill and intangible assets.IACInterActiveCorp (IAC), LendingTrees parent group, had announced last November plans to divide its various internet businesses (which include the search engine Ask.com, Ticketmaster, the largest ticket seller in the US, and The Home Shopping Network) into five separately quoted companies in an effort to boost shareholder value.There is good news and bad news this quarter, the mix of which is another reason why our previously announced plans to reorganise IAC into five independent public companies makes more and more sense, said Barry Diller, IACs CEO, in a statement.According to LendingTree, it has facilitated more than 23 million loan requests and $185 billion in closed loan transactions since it was established in 1998
On top of Romania
Douglas Blakey talks to Manfred Wimmer, CEO of Banca Comercial Romn, Romanias largest retail banking group, about completion of its transformation process following its acquisition by Austrias Erste Group and the strategies the bank is implementing to maintain its spectacular growth in earnings.Boasting a market share by assets of more than 24 percent and on target to achieve 40 percent CAGR in net profit for the period 2006 to 2009, Banca Comercial Romn (BCR) is by some distance the largest bank in Romania and a significant part of parent group Erstes Central and Eastern European (CEE) franchise.On 29 February, BCR announced a 42 percent rise in adjusted net profit for 2007 to a record 362.1 million ($549.9 million).BCR is ahead of schedule to complete a three-year transformation programme following its acquisition by Erste in 2006
A fresh start for Nedbank
The countrys fourth-largest banking group by assets, Nedbank posted strong annual 2007 figures at the end of February: headline earnings up 33.5 percent to ZAR5.92 billion ($791.3 million), ROE up from 18.6 percent to 21.4 percent and a reduction in its cost-income ratio from 58.2 percent to 54.9 percent.Nedbanks retail division reported headline earnings up 37.3 percent to ZAR2.01 billion despite what the bank called the more challenging credit environment in South Africa; its credit loss ratio worsened from 1.1 percent to 1.26 percent.More significantly, 2007 was the end of a three-year strategic plan by the bank, initiated after a couple of years of declining market share.Implementation of Nedbanks turnaround programme devised in three distinct phases: Fix (2005), Consolidate (2006) and Grow (2007) dates back to a set of very poor results in 2003, resulting in a rights issue in 2004
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Definitely different
The marketing initiative comes, appropriately, with a new tag line, Determined to be Different.CBA posted a record A$2.38 billion ($2.23 billion) net profit for the six months to 31 December 2007, up 4 percent from A$2.29 billion for the same period last year, having increased provisions for bad debts by A$138 million during the half; the results received a lukewarm response from analysts but did not generate the kind of publicity endured by a number of CBAs peers in the US or Europe.By contrast, the banks new advertising campaign, which kicked off on Australia Day (26 January), the official national day of Australia, created quite a stir and a level of publicity rarely associated with a banks marketing activity.High-profile Australian ad man and entrepreneur John Singleton, founder of the countrys largest communications services group, STW, went on the warpath, calling for CBAs ads to be scrapped and suggested the person responsible for the campaign should be sacked
The call of the smart centre
A study from US management consultancy Booz Allen Hamilton has indicated that banks looking to make a success of their call centre operations should focus less on the straw man argument of onshore versus offshore, and instead concentrate on the fundamentals of an integrated, personalised service.Booz Allen cited Wachovia as a best practice example, noting that the banks call centres consistently outperform its US rivals in terms of customer satisfaction
ING Direct’s profits decline sharply
ING Direct, the pioneer of the direct banking model and whose mission statement is to be the worlds most preferred consumer bank, suffered a sharp fall in overall profits in 2007, with a significant decrease in the UK dragging down earnings ING Direct recorded an annual profit of 530 million ($806 million), a drop of 23.6 percent from 2006s 694 million; fourth-quarter profits fell 57.6 percent to 73 million The units cost-income ratio also shot up: from 65.4 percent to 80.9 percent.While it registered relatively static growth in many of its markets, in particular North America, ING Direct had a very poor year in the UK, registering a 100 million loss for 2007, 76 million alone in the fourth quarter
SEPA finally launches
The initiative has been designed with the goal of ensuring that electronic payments made across the region by bank transfer, direct debit, credit or debit card should become as straightforward as domestic payments, thanks to the adoption of common processing standards and systems. Direct debit changes are scheduled for late 2009.We believe enormous benefits are going to accrue to consumers and businesses in Europe, said Charlie McCreevy, European Commissioner for Internal Market and Services.A report by the European Commission on SEPA compliance concludes the combination of payments market harmonisation and e-invoicing offers potential benefits of 123 billion ($178 billion) over the next six years, and another 238 billion if SEPA can be used as a platform for electronic invoicing Europes banks can offset revenue pressures caused by the new system through efficiency improvements, taking advantage of scale economies and access to an enlarged European payments market, adds the EC.4,000 banks have signed upAccording to the Brussels-based European Payments Council (EPC), which has spearheaded the project, around 4,000 banks in Europe about one-half of all banks in the region but accounting for about 80 percent of transactions have signed up
Some retail shine in a gloomy year
Amid a very difficult economic environment, a number of US banks have been able to flag up some positive retail banking performances for 2007, writes Douglas Blakey While the fourth quarter of 2007, fuelled by the collapse of the subprime mortgage market, may have resulted in the worst earnings period for US banks since the stock market crash of 1929, there were nonetheless some encouraging retail banking performances announced by a number of leading players.