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Bandhan Bank‘s Chief Financial Officer, Rajeev Mantri, said that the bank is aiming at 18 per cent growth in advances annually with a strategic shift towards secured loans, including housing loans, affordable housing, vehicle finance, and gold loans.
“We are expecting our advances growth to be in the range of about 18 per cent or so on an annual basis, and I think that growth will continue. However, within that growth, we are trying to change our secure to unsecured mix, whereby there will be a greater focus on growing the secured loan portfolio,” Mantri told ETCFO.
He said this is intended to drive faster growth in the secured lending segment compared to microfinance and other unsecured lending areas.
“In the year ended March 2024, the bank saw very healthy growth of both advances and deposits. If we normalise for the technical write off of Rs 3,800 crore, the advances growth was almost around 18 per cent and the deposit growth was almost 25 per cent. So that’s very healthy growth that the bank saw, both in assets and liabilities. Our operating profitability was also quite healthy. Of course, since we did this technical write-off, there was a higher amount of provisioning that we did to clean up our NPA book to some extent,” the CFO said.
In addition to growth aspirations, Bandhan Bank remains committed to fortifying its deposit base, aiming for liabilities to outpace asset growth. Mantri expressed confidence in the bank’s capability to achieve this goal, underscoring ongoing efforts to enhance deposit generation capabilities.
“Liabilities need to grow faster than assets, and we believe we have the capabilities to do it,” Mantri said, stressing on the strategic priority of strengthening deposit generation, which grew by 25 per cent in the past year, supporting the bank’s expansion plans.
Furthermore, digital transformation emerged as a cornerstone of Bandhan Bank’s strategy, aimed at enhancing customer experience and operational efficiency.
“Greater digital offerings will provide seamless experiences for retail and commercial clients,” said Mantri. The bank plans to leverage digital tools extensively to streamline operations and improve overall productivity.
“We are focusing on digital penetration to offer enhanced services, particularly to retail and commercial clients,” Mantri said. He highlighted the role of digital initiatives in improving customer experience across various banking services, ensuring a seamless and efficient interaction platform.
Rajeev Mantri reiterated the bank’s commitment to prudent risk management and governance to sustain growth and trust among stakeholders.
The bank intends to augment its digital offerings across retail and commercial segments, aiming to enhance customer experience through seamless digital solutions. Furthermore, leveraging digital tools is anticipated to streamline operational processes, thereby improving overall productivity and efficiency within the bank.
Profitability and Financial Outlook:
Addressing queries on profitability, Mantri outlined the bank’s target for return on assets (ROA), expecting it to normalise around 2 per cent over the coming years. Despite potential margin compression due to increased secured lending, the bank anticipates offsetting this through enhanced cost of funds and improved portfolio quality, thus supporting sustainable profitability growth.
Investment and Expansion Plans:
Regarding future investments, Mantri pointed to ongoing investments in people, technology, and infrastructure as critical enablers of growth. The bank plans to continue expanding its branch network strategically while focusing on renovating existing branches for enhanced customer engagement and efficiency. Additionally, significant investments are earmarked for technology enhancements, including advanced analytics and digital platforms, aimed at fortifying the bank’s operational resilience and service capabilities.
Sectoral Focus and Revenue Drivers:
Mantri delineated Bandhan Bank’s diversified business segments, emphasizing the pivotal role of microfinance, housing loans, commercial banking, and emerging retail assets in driving revenue growth. Notably, the bank maintains a strong market position in microfinance, aiming for steady growth while expanding its footprint in housing finance and SME lending segments.
Bandhan Bank remains steadfast in its commitment to sustainable growth, anchored by prudent risk management practices and a customer-centric approach. With a clear roadmap outlined for the next several years, the bank anticipates navigating market dynamics effectively while capitalizing on emerging opportunities in India’s evolving financial landscape, the CFO said.
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