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IDFC Bank will target 10-15 per cent year-on-year growth in bottom-line every year and expand its customer base from 400 to 15 million within five years, according to a top official.
The private sector bank is set to kick-off operations as a universal bank from October 1, with 23 branches, 15 of which will be in Madhya Pradesh.
By the end of the current financial year, it expects to have 60 branches. Executive Vice-Chairman and Managing Director, Rajiv Lall, said he would be really disappointed if the profit does not clock a 10-15 per cent y-o-y growth.
The three identified pillars — commercial and wholesale banking, rural (or Bharat) banking, and personal and business banking — are expected to provide the required impetus for growing business and profits.
The bank will start with a loan book of about ₹55,000 crore. Currently, its customer base comprises only large corporates, mostly from the infrastructure space.
IDFC Bank will rely on technology in a big way to reach out to its customers. “We would be happy to over-invest in technology (and spend on people) and under-invest in branches,” Lall said after unveiling his bank’s brand identity and announcing the Board of Directors and management team.
Besides roping in veterans from foreign and private sector banks, IDFC Bank will also scout for talent from the non-banking space.
IDFC Bank expects to build a priority sector lending portfolio — comprising loans to agriculture, micro, small and medium enterprises, education segments — ₹10,000 crore to ₹15,000 crore in two to three year’s time and is comfortably placed to meet the statutory liquidity ratio (SLR) requirement.
SLR is the slice of deposits that banks have to necessarily invest in government securities. Currently, it is at 21.5 per cent of deposits.
In the last analyst conference call, bank officials said that since IDFC will transition into a bank with effect from October 1 and there is no visible solution for assets (coal and gas-based assets), it is prudent to make incremental provisions against known risks.
It will be making incremental provisions of approximately ₹2,500 crore this quarter against such coal and gas-based assets and profitability will be impacted in the second quarter.
“So our objective in doing this (incremental provisioning) is to provide a clean balance sheet and book value for the bank without an overhang of incremental provisions relating to these assets,” said Vikram Limaye, MD & CEO, IDFC.
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