India’s largest financial services group, is planning to hire
25,000 staff and open 2,000 new branches during 2009 in an effort
to recover market share lost to private sector rivals ICICI and
HDFC Bank. It is also looking to launch a wealth management arm as
well as increase its revenues from insurance.
SBI’s bold expansion plans, defying the expected economic
slowdown in India, will bring its branch network up to around
12,000 branches, having already opened 576 new branches in the past
year. The group’s chairman, OP Bhatt, says the bank is aiming to
increase its retail market share by around 0.8 percent next year:
SBI, which is 59 percent owned by the government, has a 16.1
percent market share in retail deposits and 16 percent in
loans.
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And despite a push in India from the country’s banks into online
and mobile banking, branches are at the centre of SBI’s expansion
plans. Bhatt said the new branches will be concentrated in smaller
towns and the suburbs and will help to spur economic growth, adding
the “new India needs to be serviced [and] it can be serviced only
with branches.”
The bank is reportedly preparing to launch a wealth management
operation aimed at clients with a minimum deposit of INR500,000
($10,000). SBI has recruited around 1,200 financial managers for
its wealth management arm, with further recruitment planned, and
has also just set up a joint venture with Insurance Australia Group
(IAG) to target the country’s general insurance market, expected to
grow by around 15 percent to 20 percent over the next decade.
SBI and IAG will initially hold 74 percent and 26 percent,
respectively, of the new company, but the insurer has an option to
increase its stake to 49 percent once India’s foreign investment
regulations are amended.
SBI remains upbeat about its business for the second half of the
financial year, despite fears of an economic slowdown in India,
having forecast a 40 percent growth in its net profit for the half.
In the first half of the year, SBI’s group profit before tax rose
by 5.4 percent to $1.43 billion but its retail division posted
profit down 6.5 percent to $1.04 billion (see RBI
602).
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