Commonwealth Bank to exit India

The bank will terminate its presence in Mumbai, tightening its Asian strategy after weak local results.

CBA spokeswoman said the closure would take “many months”. Picture: Ian Waldie/Bloomberg.

Commonwealth Bank has unveiled plans to exit India, the fastest growing major economy in the world, following weak results and a tightening of the group’s strategy in Asia.

CBA, which has a relatively small on-the-ground presence in Asia mostly focused on Indonesia and China, said its sole Indian branch in Mumbai would be closed “after careful evaluation of our India business alongside our refocused strategy”.

CBA opened the branch in 2010, focusing on commercial customers and small businesses with a smaller presence in basic retail banking products like deposits, plus servicing Indians living in Australia.

The move builds on a pullback from Asia by Australia’s banks being led by ANZ, the biggest of the major banks in the region, which is running off low-returning loans and trying to sell a handful of equity stakes in Asian lenders.

Elsewhere, Westpac last year also sold its operations in Samoa, Cook Islands, Solomon Islands, Vanuatu and Tonga.

While all the banks continue to connect customers between Australia and Asia, headwinds lashing their core businesses, stricter capital rules and slowing growth in the region are forcing reviews of how best to play in the competitive markets.

CBA’s India operations sit in the group’s International Financial Services division run by Rob Jesudason, a former investment banker who is based in Hong Kong and reports to chief Ian Narev.

For the year to June 30, the “IFS and other” reporting division suffered a 21 per cent dive in cash profit to $26 million. The bank’s overall cash profit rose 3 per cent to $9.5 billion, the slowest growth since the global financial crisis.

A CBA spokeswoman said the bank “routinely” reviewed which parts of the group’s business “need to evolve in order to ensure long term sustainability and success”.

She said the closure would take “many months” and customers could conduct withdrawals and fund transfers to other people and banks, but the branch will not accept new term deposits or open new accounts.

In accounts filed on CBA’s India website, the bank made a $7.3m loss for the year to March 31, 2015, based on exchange rates on Tuesday. At the time, it had around $77m in loans and $19.4m of deposits.