Mangalore-headquartered Karnataka Bank has set a target of 25 percent growth in business in 2011-12, and plans to achieve it by focusing more on the retail segment.
The bank’s turnover as on date is Rs 46,500 crore, of which Rs 28,200 crore is in deposits while Rs 18,300 crore is in advances. By March 2012, it plans to take the turnover to Rs 54,500 crore, with deposits at Rs 32,500 crore and advances at Rs 21,500 crore.
“So far we have not focused on the retail sector. We have not tapped the segment’s potential. This year, we expect 50 per cent of the growth to come from this segment,” said P Jayarama Bhat, managing director, Karnataka Bank, adding that it had lined up a series of initiatives on that front.
He said there were plans to open 26 more branches by the end of the fiscal, to take the total number by then to 510.
“We will be expanding our branch network in unbanked rural areas as per the RBI guidelines,” he told reporters here on Monday.
Bhat was in Hyderabad to open its 35th branch in Andhra Pradesh, which puts its current branch network at 484.
“We will be aggressive on the number of accounts. We want to grow the current accounts ô savings accounts (CASA) to 28 per cent by the end of this year, from around 23 per cent last fiscal,” Bhat said. The bank would start offering mobile banking services in six months, while add-on services to savings accounts such as travel cards, gift cards and point of sale services would start soon.
On the lending side too, the bank would “totally concentrate on retail advances,” Bhat said. Its focus would mainly be on housing, vehicle, mortgage and agriculture loans. It would also be aggressive on gold loans to maintain the 100 per cent growth the segment recorded last year.
On the Reserve Bank of India’s rate hike, Bhat said the bank need not increase its rates every time the central bank hikes policy rates. “Our assets-liabilities committee will meet in a week and take a call on the rates. We have to watch the market,” he said.
According to him, the bank had raised rates on advances by 50 basis points after the last hike, but kept the deposit rates constant. Its net interest margin (NIM) was 2 per cent at the end of the June quarter, and plans were to take it to 2.75-3 per cent by the end of the fiscal, he said.
Its average cost of deposits was 7.54 per cent in Q2, while yield on assets was 11.2 per cent. The bank has no immediate plans to raise funds as its capital adequacy ratio was at 13.03 at the end of Q2, as against the Basel-II requirement of 9 per cent.
“We have sufficient head room of Rs 350 crore in terms of Tier-II capital, which is at Rs 2,858 crore,” he said.
The branch inaugurated on Monday at LB Nagar in Rangareddy district is its 35th in the state, while another is set to be opened in Karimnagar soon. Andhra Pradesh accounted for a business of Rs 2,800 crore last year, of which Rs 1,600 crore is in loans and the rest in deposits.
The turnover in the state is expected to touch Rs 3,000 crore this year.
