Axis Bank the third largest private bank in India, will be increasing its retail loans and contribute about 25% of the total loan portfolio within next two years. To achieve this ambition, the bank will be rolling out 200-250 branches and around 1,000 ATMs every year.
“We want to grow our retail assets and we hope to tap the potential in smaller town and cities. We are expecting to increase the share of retail loans to 25% of our total advances in about two years,” said Axis Bank executive director (retail banking, SME & agri) SK Chakrabarti.
In 2009-10, the bank’s retail advances stood at Rs 20,823 crore from the year-ago amount of Rs 16,052 crore, a growth of 30% year-on-year. At present, bank total advances amount to Rs 1,04,343 crore which had grown by 28% y-o-y. Bank retail loans include 70% of mortgaged home loans the rest comes from credit cards, auto (in 4-wheeler segment) and personal loans.
To increase its retail baking, the bank is taking some measures to mobilize its business operations further. Chakrabarti informed, “We have now divided business responsibilities in 26 circles instead of four zones as it was earlier. Under one circle, there will be 35-40 branches, which will be easy to handle for a manager.”
He added, “We are looking at the customer as an individual having requirement in all the spaces. Our branch expansion will help us acquire more customers and thereby help multiply our retail banking business”.
Wednesday, May 19, 2010
Sunday, May 9, 2010
PSU Banks will focus on personal loans to increase margins and profitability
To increase interest rate margins and profitability public sector banks are offering personal loans to the people. Among the loans segment personal loans yield more returns.
Banks like Allahabad Bank, UCO Bank, Union Bank of India and United Bank of India have already worked out new strategies to sell their high-yielding personal loan products to their retail customers. Earlier during economic slowdown many of these banks have stopped offering personal loan products as number of defaults have increased at that time.
On an average, these banks have lower average of retail loan share in comparison to the industry. The retail loans outstanding loans average is around 12-14% in comparison to industry average of 20-22%.
Allahabad Bank chairman and managing director JP Dua said, “Personal loan gives a better spread as well as it helps in building relationship.” In the next three years bank will be improving its retail loan shares to 22%.
Allahabad bank’s retail loan average is at 13.92% whereas Union Bank ratio is at 11.5%. State Bank of India countries largest lender has the ratio around 21%.
Public sector banks earn maximum return of around 14-15% from off-shelf loan products in personal loan category whereas from car loans they earn a return of around 12%. On the other hand housing loans get a secured and a higher volume of business, but the returns are much less than the other loan categories.
Banks prefer salaried customers for off-the-shelf products as they link such products to the salary accounts of the customers to minimize probability of default.
According to United Bank of India chief Bhaskar Sen with the improvement in economic conditions the purchasing power of middle class families is also increasing therefore this can boost demand for car loan and housing loan products. Mr Sen said, “The housing segment will continue to give banks businesses many more years. In the car loan segment, demand is seen especially in the small car category.”
UCO Bank chairman and managing director SK Goel said: “We have identified 200 branches across the country to push retail loan products as our share of retail loan business is comparatively low.”
United Bank has 12% of retail share whereas UCO Bank retail share is around 14%. Among the public sector banks, Bank of Baroda has a better retail loan ratio at 20% followed by Indian Bank at 18%.
Bank of Baroda executive director RK Bakshi said, “A higher share of retail loan is important for credit diversification. It’s a stable business and it improves relationship with customers.”
Mr Dua of Allahabad Bank said that public sector banks have large number of branches therefore they can easily improve their retail loan base through their network. “We will try to leverage our vast branch network. We plan to expand our current and savings account deposit base to reduce the cost of deposit and a focus of retail loan will accompany this drive,” Mr Dua said.
Banks like Allahabad Bank, UCO Bank, Union Bank of India and United Bank of India have already worked out new strategies to sell their high-yielding personal loan products to their retail customers. Earlier during economic slowdown many of these banks have stopped offering personal loan products as number of defaults have increased at that time.
On an average, these banks have lower average of retail loan share in comparison to the industry. The retail loans outstanding loans average is around 12-14% in comparison to industry average of 20-22%.
Allahabad Bank chairman and managing director JP Dua said, “Personal loan gives a better spread as well as it helps in building relationship.” In the next three years bank will be improving its retail loan shares to 22%.
Allahabad bank’s retail loan average is at 13.92% whereas Union Bank ratio is at 11.5%. State Bank of India countries largest lender has the ratio around 21%.
Public sector banks earn maximum return of around 14-15% from off-shelf loan products in personal loan category whereas from car loans they earn a return of around 12%. On the other hand housing loans get a secured and a higher volume of business, but the returns are much less than the other loan categories.
Banks prefer salaried customers for off-the-shelf products as they link such products to the salary accounts of the customers to minimize probability of default.
According to United Bank of India chief Bhaskar Sen with the improvement in economic conditions the purchasing power of middle class families is also increasing therefore this can boost demand for car loan and housing loan products. Mr Sen said, “The housing segment will continue to give banks businesses many more years. In the car loan segment, demand is seen especially in the small car category.”
UCO Bank chairman and managing director SK Goel said: “We have identified 200 branches across the country to push retail loan products as our share of retail loan business is comparatively low.”
United Bank has 12% of retail share whereas UCO Bank retail share is around 14%. Among the public sector banks, Bank of Baroda has a better retail loan ratio at 20% followed by Indian Bank at 18%.
Bank of Baroda executive director RK Bakshi said, “A higher share of retail loan is important for credit diversification. It’s a stable business and it improves relationship with customers.”
Mr Dua of Allahabad Bank said that public sector banks have large number of branches therefore they can easily improve their retail loan base through their network. “We will try to leverage our vast branch network. We plan to expand our current and savings account deposit base to reduce the cost of deposit and a focus of retail loan will accompany this drive,” Mr Dua said.
Subscribe to:
Posts (Atom)
