Barclays balance sheet is not in the league of the big four foreign banks - Citi, Standard Chartered, HSBC and Deutsche - but the bank surpasses competition in terms of CAGR on deposits, advances, fee income and operating profits.
Clear focus on growth, profitability and returns has derived immense benefits for Barclays India. The bank posted an operating profit of Rs 840.14 crore and had deposits of Rs 15,149.73 crore with a balance sheet size of Rs 32,532.23 crore at the end of 2015/16. Barclays balance sheet is not in the league of the big four foreign banks - Citi, Standard Chartered, HSBC and Deutsche - but the bank surpasses competition in terms of CAGR on deposits, advances, fee income and operating profits. The bank is also on top in terms of capital adequacy ratio and asset quality.
"Growing our top line was no doubt critical, but we have done so while maintaining a close watch on our costs. During the year, even as our revenues grew, our operating expenses declined," says Jaideep Khanna, CEO, Barclays India.
The bank's cost-income ratio of 32 per cent in 2015/16 is among the lowest in the industry. The outstanding performance has helped the bank emerge as the best bank in the foreign banks category. This is quite a feat as others in the group included the high profile, big four foreign banks. Indeed, last year, Deutsche Bank was the winner.
"We've also ensured that our asset quality has not been compromised. Our gross Non-Performing Assets (NPA) at 1.1 per cent and our net NPAs at near-zero, were one of the lowest during FY16," claims Khanna.
Barclays Bank in India has a wholesale business model - a fully integrated 'Corporate and Investment Banking' business. It offers a range of services, including trade finance, working capital and products - both offshore and onshore - and corporate finance. "So, essentially, we meet both the growth and working capital needs of our clients. We do not expect to change this business mix in the foreseeable future," says Khanna.
Prolonged slowdown in business activity, especially in the banking sector, was one of the challenges that Barclays had to handle in recent years. NPAs in the banking system, the extent of leverage on corporate balance sheets and low capacity utilization in many sectors, have formed the crux of this problem. "While business during the last couple of years has indeed been slow, we remained closely engaged with our clients with whom we have had deep relationships for many years now," adds Khanna.
Focus on coporates
Barclays set up its first branch in India in 1990. After strengthening its investment banking team in 2001, it attained a leadership position in the debt capital market within a few years.
In 2007, the bank started its retail and commercial operations, but exited both of them in 2011. In the same year a joint 'Corporate and Investment Banking' strategy was embraced. The strategy has allowed Barclays to service the needs of clients more efficiently and has translated into a stronger financial performance, believes Khanna, pointing to the banks results over the last three years.
"Today, we have over a billion dollars of invested capital in India and employ over 28,000 people across our commercial and service businesses,"he says. Some 16,000 are employed by Barclays Technology Centre India (BTCI), 11,000 by Barclays Shared Services (BSS) and about 1,000 by Barclays Securities India Private Limited (BSIPL) and Barclays Bank Plc. (BBPLC), reveals Khanna.
Barclays Bank India does not feel the need to grow its business inorganically. "We believe the business environment over the next few years is going to allow us ample opportunities for organic growth without having to depend on the acquisition route to achieve scale," says Khanna but acknowledges that the banks fortunes are tied to the progress of the domestic economy. "We believe the policy changes being implemented by the government will galvanise GDP growth over the next few quarters which in turn will benefit banks."
Barclays has defined its strategy as enabling "unrivalled access for our clients in the country to the deeper capital markets of the Europe and the US and likewise helping our European and US clients access the opportunities that India presents," according to Khanna. "Our results have validated our strategy," adds the Barclays India chief.