Public sector lender IDBI Bank plans to double its branch network to 2,000 offices (branches) in the next six years, gathering more retail business.
It morphed into a commercial bank in 2004 from a development finance institution. It remains a largely wholesale bank, with the corporate and commercial segments making up a little over 60 per cent of its business.
It had only 442 branches in 2006-07; this grew to 973 in 2011-12. While it intends to reinforce the wholesale side, the idea is to prune the share of corporate banking to 50 per cent by 2015-16.
The credit extended grew 15.3 per cent to Rs 1,81,158 crore in 2011-12. Chairman and Managing Director R M Malla said it had followed a calibrated policy of growing the loan book by 15 per cent yearly since 2010-11, focusing on improving the profitability. The bank expects to expand loans by another 15 per cent in 2012-13.
Going slow in expanding the corporate loan book is also a strategy to address the challenge in meeting priority sector lending (PSL) targets. The bank finds it difficult to reach targets with a limited branch base. After becoming a commercial bank, it has an obligation to meet a 40 per cent PSL target, including that for agriculture and micro and small enterprises.
In 2011-12, its deposit base grew 16.6 per cent to Rs 2,10,493 crore. The share of low cost deposits (current account and savings account, or Casa) was 24 per cent, up from 20 per cent at the end of March 2011. It is behind peer banks on the Casa share, with most others having it above 30 per cent. “We want to take it to 30 per cent by 2015,” he said, adding the waiving of charges on transactions had helped increase the share of Casa funds.
The limited base of low-cost deposits has hit its interest margins. The net interest margin remained flat at two per cent in 2011-12. It expects to improve this by 25 basis points in 2012-13.
