Kolhapur-based Ratnakar Bank saw a net profit growth of over 100% last year, but this year it is expecting the growth to moderate. In an interview with Vrishti Beniwal, Rajeev Ahuja, head of strategy and financial markets, said the bank would be careful about growth in this environment. Excerpts:
Do you expect last year like growth to continue this financial year?
There are various aspects to this growth. Between this March and November we have opened 20 odd branches, refurbished several offices, Finacle implementation should get completed by December 2012, ATM networks have expanded from over 50 last year to about 115 by October. So this financial year is very important for us in this transformation roadmap. A lot of product launches are also happening. In the risk environment it is better to be cautious from growth perspective. The base is still modest but even so we need to internalize a lot of things before we say we can grow much faster. So this year we won’t see the growth of last year.
In what range you are expecting to grow?
It could be roughly 40-50%. It doesn’t matter if it’s 10% more or less because we are not judging ourselves by that. We are judging by the quality of the franchise, quality of the client, how our sales force our performing and so on. Since we are an unlisted institution it really doesn’t matter we grow today or six months from now. Our investors and shareholders expect us to do right things before we take big leagues.
Have you set any targets for yourself in terms of branch expansion?
Historically the bank has been embedded in big part of Maharashtra and Karnataka with a solitary presence in Delhi and Bangalore. From 85 branches two years ago, we increased to 100 at the end of March 2011 but it was in the same footprint. Mumbai to northern Karnataka is a big business corridor. The idea was to develop that further. Then we thought of setting up initial base camps for
other markets and identified NCR as a significant potential.
With branches in Noida, Gurgaon, Bhiwadi and Sohna road we now have a decent presence in NCR. We put out one in Surat, we are going to Chennai, Hyderabad. All these markets are large markets and have to be seen three to five years from now. After Finacle implementation we will go for the next phase. We will be 175-200 branches by March 2014.
When do you plan to go for a public offer?
It will always be there once we reach a certain size and scale. We may not be the same size as HDFC bank but let’s get the core right. Next 12-18 months will allow us to get the product, process, technology, a broader footprint, and then we will start evaluating how to look at a public offering. The bank has a lot of idle capital. How do you plan to deploy it?
Every bank raises a big chunk of capital and uses it over 18-24 months. Every two years or three years they have to go to the market. We raised a lot of capital in early 2011 because we knew that our transformation was not going to be a six months affair; it’s a two to three year investment exercise. So let’s create capital so that we are not starved of it when we really have to expand ourselves. We have a capital adequacy ratio of just below 20% which is all tier I.
