With books clean, ING looks to net more

ING Vysya Bank, which saw a 31 per cent fall in net profit to Rs 59 crore in 2003-04 from Rs 86 crore in 2002-03, is likely to clock a better bottomline in the current year as "most of the provisioning for legacy assets is behind us," says Bart Hellemans, managing director and CEO.

Last year's bottomline was affected by Rs 132 crore (under "others") provisioning (Rs 27 crore in the previous year) on account of impaired non-banking assets.

This relates mainly to a property in Mumbai and a plantation which dates back to the pre-ING takeover days. Emphasising the prudential nature of the provisioning, Hellemans said "ING Vysya now has the cleanest balance sheet among all listed banks".

The banking assets of the company saw a clear improvement last year with provisioning for non-performing assets (NPAs) going down 40 per cent to Rs 52 crore from Rs 88 crore in the previous year, despite a tightening of asset classification norms by the Reserve Bank of India.

Net NPA to net advances stands reduced to 2.6 per cent from the previous year's 3.6 per cent.

The improvement in the banking operations of the company is reflected in the operating profit for last year rising 8.2 per cent to Rs 262 crore from Rs 242 crore in the previous year. Net interest income rose 12.5 per cent to Rs 244 crore.

Seeking to distance ING Vysya from most of the public sector banking industry, Hellemans says, "I am not hundred per cent convinced that they know how to handle the complexities of running a retail business. It needs huge investment in technology to supervise retail loans. Some public sector banks' delinquency rates on housing loans, for example, are higher than that of HDFC," the oldest and soundest player in the field.

Explaining how ING Vysya has shaped its housing product properly and priced it fairly, he pointed out that its variable lending rates are linked not to the something which the bank itself fixes, like the prime lending rate, but to Mibor (Mumbai inter-bank offered rate) and refixed every quarter.