HDFC's branch reign may be short

HDFC Bank, whose amalgamation with Centurion Depository Financial Institution of Punjab will see it maneuver past ICICI Depository Financial Institution in figure of branches, could again fall back by March-end.

ICICI Bank, which have 400-plus subdivision licenses in its custody currently, is said to be planning an aggressive expansion. Moreover, the bank's joint managing manager and main fiscal military officer Chanda Kochhar had in mid-January told deoxyribonucleic acid Money, "In the adjacent three calendar months ICICI (Bank) is planning to revolve out more than than 400 subdivisions across the state in improver to its 955 subdivisions and extension counters currently. Additions will also be made to the 3,687 ATMs."

As a result, by March end ICICI Depository Financial Institution could have got 1,355 branches, vis-à-vis the 1,148 subdivisions for the HDFC Depository Financial Institution (754) and Centurion Depository Financial Institution of Punjab (394) combine.

"ICICI Depository Financial Institution have set its branch-opening process on fastrack after the amalgamation of CBoP into HDFC Depository Financial Institution was announced. ICICI Depository Financial Institution have about 425 licenses in manus and is rolling out speedy apparatuses in grade two and grade three cities," an industry beginning said.

Getting subdivision licenses in a metropolis of 1s pick is becoming difficult, state analysts. "HDFC Bank's subdivision web would be up by 50 per cent... as it would acquire clasp of 390+ subdivisions of CBoP. We believe this would be the chief intent of purchasing a depository financial institution in Republic Of India as getting entree to ramify licenses have go much more than difficult," said a February 22 study by Deutsche Depository Financial Institution on the then proposed merger.

The CBoP subdivisions that HDFC Depository Financial Institution would acquire clasp of are in metroes and metropolises where HDFC makes not have got a strong presence. The new subdivisions of ICICI Bank, meanwhile, are coming up in grade two and grade three cities, said the source.

The geographical locations of the subdivisions were not disclosed.

"Generating concern from new subdivisions in grade two and grade three metropolises takes time. So it will be about two old age by the clip ICICI depository financial institution can bring forth sizeable concern from its new branches," an analyst who did not wish to be quoted told deoxyribonucleic acid Money.

Sources also point out that HDFC Depository Financial Institution had chalked out an aggressive roll-out program of around 250 branches, which currently it have licenses for. But the program have been set on the backburner to settle down the amalgamation of CBoP, which too have acquired licenses for around 20 branches.

ICICI Depository Financial Institution also throws more than assets per subdivision than the HDFC-CBoP combine. One ground for that could be ICICI's joust toward corporate business relationships and its place loan portfolio, which for HDFC Bank, is managed by parent company HDFC.

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Integration to be smooth: Aditya Puri

HDFC Bank, the 2nd biggest private sector depository financial institution in the country, is all set to absorb Centurion Depository Financial Institution of Punjab (CBoP), the new coevals private sector bank. This volition be HDFC Bank's 2nd acquisition after Times Bank.

HDFC Depository Financial Institution Managing Director and Head Executive Military Officer Aditya Puri said in an interview to Business Standard that the integrating would be over in five-seven months. Excerpts from the interview:

What prompted the merger?

We have got always been looking out for the right opportunity. We wanted to purchase an physical thing that would give us the marketplace share, the right people, cost efficiencies and also value for the shareholders. CBoP was the right pick and the matrimony happened.

What are the synergisms with CBoP?

CBoP subdivision web is an plus for HDFC Bank. The concerted physical thing will have got a web of 1148 branches. On the concern front, they are very aggressive in the little and medium endeavors sector. This is in keeping with our strategy. They have got seen a 60 per cent growing in the SME business.

As a concerted entity, we will be able to capture this concern better. CBoP is not present in the crdit card space, and hence, HDFC Depository Financial Institution will be able to offer its recognition card to all the existent CBoP customers.

They are not large in the auto loans and dealing banking business. HDFC Depository Financial Institution is not large in Canada but they have got a necktie up with Horse Opera Union for the remittal business. There is no overlap in concern segments, hence this is an ideal marriage.

Will there be any cost efficiencies?

CBoP have been grappling with a high cost-to-revenue ratio. With HDFC Bank's scale of measurement coming into the picture, this should be sorted out. The CASA (current business relationship and economy account) ratio should also better at CBoP subdivisions to be in melody with that of HDFC Bank, which will convey the cost of finances down.

Will there be any subdivision rationalisation?

There will be no major break in footing of subdivisions as they will compliment our concern and also assist us in our agribusiness business. The strong web (of CBoP) in the South will assist us in fiscal inclusion.

How will the people integrating work out?

We are growing at 40 per cent and at this growing charge per unit we will necessitate people. There will be no lay-offs. In fact, we add new people every year. The integrating of the 2nd rung functionaries should be smooth as there is hardly any overlap.

Centurion to shed auto skin

Mumbai: Centurion Depository Financial Institution of Punjab is trying to change its mental image of a depository financial institution whose primary funding is in the car sector.

After two mergers, the depository financial institution is now looking to change gearing and addition its footmark in other countries of retail banking.

"It is true that we are considered a depository financial institution mostly connected with car and I can't deny that our bequest have been driven by auto. But that is more than of a bequest issue. We are in the procedure of adding new characteristics to our retail concern like mobile money transfer, cyberspace banking etc," said Vivek Vig, state head, CBoP.

Vig said that the sum share of car loans in the bank's portfolio is 10% currently.

The depository financial institution will also effort to better its recollection value among the public in the adjacent couple calendar months to fit the degrees by its larger private sector rivals, Vig said.

Vig admitted the depository financial institution was earlier giving "extra" attending to the car segment, but said that in the last three-and-a-half years, particularly after the amalgamation with Depository Financial Institution of Punjab, it have also increased attending to little and medium endeavors (SME).

"We have got an sole joint venture with Fullerton for underwriting their SME loans. We have got also seen a 100% growing in our agribusiness lending, though it is on a low base," Vig said.

Besides SME and agriculture, CBoP is also betting large on the self-employed segment, the loan against place marketplace and NRI services, particularly in the Center East.

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The depository financial institution have also started an plus Reconstruction company called IARC, together with the existent estate direction and consultative company Cerma.

Vig said the depository financial institution will go on to be retail driven. "We have got permission to revolve out 30 subdivisions by October this year, including 6 in Punjab by March," he said.

CBoP is a mostly North India-based depository financial institution and keeps a sizeable presence in Punjab, Haryana and North Rajasthan. But the Modesty Bank's blessing last August to the bank's amalgamation with Kerala-based Godhead Krishna Depository Financial Institution (LKB) have also given it 110 subdivisions in the South.

In fact, the depository financial institution have grown from 60 subdivisions to more than than 400 subdivisions and a balance sheet size of Rs 25,000 crore from Rs 2,500 crore in the last three-and-a-half years, thanks mainly to its two mergers.

"We have got always said that we are unfastened to both organic and inorganic growth. Even when we did both the mergers, we were not in negotiation only with them. You necessitate to cook three for one to boil… These things take time," Vig said.

However, the amalgamations have got meant that all the bank's subdivisions are not on the same core banking platform. "We are still working on it… By the start of the adjacent fiscal year, LKB subdivisions will also be added to our core banking platform," Vig said.

And like its private sector peers, CBoP is also facing abrasion pain. The depository financial institution is focusing on hiring direction alumni from Grade two and Grade three cities.

"We hired 400 trainees last twelvemonth and we be after to engage the same figure this twelvemonth as well. We have got a contract by which we advance the best performing artists to a subdivision director within one twelvemonth and that have helped reserve some talent," he said.

"We also hired about 170 commercialism alumni last twelvemonth for military officer degree preparation and it's worked well, so we be after to engage about 300 more than this year," Vig said.

The depository fiscal institution anticipates involvement rates to come up down, but Vig said lowering place loan rates won't go on before the start of the new financial twelvemonth in April. "Home loans are not among our chief business, so it doesn't substance if other Banks cut rates or not," he said, replying to whether charge per unit cuts by other Banks will coerce CBoP to follow suit.

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