Highlights of the Discussion
- The bank plans to increase its advances by focusing on midcap and SME businesses. The bank does not plan to invest in following sectors in the slow economic scenario: gems & jewellery, textile, leather and auto ancillary.
- For the future, the bank’s focus would be to reduce its cost income ratio, provide better branch service, better back office service to customers and increase retail liability. It has no plans to open new branches as RBI has restricted them from opening new branches this year. Thus the bank’s motto would be to effectively utilize the existing branches.
- Its total branches stand currently at 80. It converted 4 of its extension counters to branches across the nine months ended Dec ’08 from 76 branches end of Mar ’08.
- Its total advances reduced by 4% from Rs 3628 crore as at Dec ’07 to Rs 3492 crore as at Dec ’08. The decline in the total advances is due to decline in its corporate advances by 12% from Rs 1826 crore as at Dec ’07 to Rs 1602 crore as at Dec ’08. The corporate advances reduced on account of the bank been cautious to provide credit in the quarter ended Dec ’08.
- The bank has been making conscious effort to reduce its retail asset portfolio. Thus it led to reduction in its unsecured retail book to Rs 519 crore as on end of Dec ’08 against Rs 788 crore as on end of Dec ’07. However, its total retail advances grew by 5% to Rs 1890 crore as at Dec ’08 against Rs 1802 crore as at Dec ’07.
- The bank targets to reduce to retail asset portfolio to minor portion of the total asset portfolio by mid 2010.
- The corporate portfolio is not as much affected as the retail asset portfolio.
- Its CASA ratio has increased from 24% in Mar ’08 and 25.2% in Dec ’07 to 28% in Dec ’08.
- Other income segmentwise, its profit on sale of investments declined sharply to Rs 0.61 crore in quarter ended Dec ’08 from Rs 5.14 crore in quarter ended Dec ’07 owing to less active IPO market. Its profit on exchange transactions grew from Rs 7.38 crore in quarter ended Dec ’07 to Rs 9.41 crore in quarter ended Dec ’08. Its brokerage reduced from Rs 20.79 crore in quarter ended Dec ’07 to Rs 15.77 crore in quarter ended Dec ’08.
- Its net interest margin (NIM) stood at 2.8% for the quarter ended and nine month ended Dec ’08.
- As of Dec ’08, its cost of deposit stood at 7.24% and its yield on advances at 12.75%.
- Its cost to income ratio is 71%
- Its credit deposit ratio is 74.15%.
- Its CAR stands at 14% as on Dec ’08 with Tier I of 12.9% and Tier II of 1.2%.
- Its staff has reduced to current 1976 employees from 2313 employees as on Jun ’08. The bank would be reducing its staff further.
- The bank has selected a CEO. The procedure of appointment of CEO is anticipated to be completed by end of Feb ’09/ early Mar ’09. The bank expects new CEO to join office by Apr ’09