State Bank of Hyderabad, one of the oldest banks in the South and the largest among the associate banks of the State Bank of India, is spreading its wings beyond Andhra Pradesh in a big way.
The 71-year-old bank opened over 200 branches in the last couple of years, with over half of these outside Andhra Pradesh. “Not that we do not want to open more branches in Andhra Pradesh, but we want to have a wider presence,” said M. Bhagavantha Rao, Managing Director of the bank, in an interview to Business Line.
Excerpts from the interview:
State Bank of Hyderabad seems to be on an expansion spree, particularly outside Andhra Pradesh. Why the sudden shift?
Our expansion drive is part of our move to concentrate beyond our traditional areas of Andhra Pradesh and parts of Karnataka and Maharashtra. Last year, we opened zonal offices in Mumbai and Delhi to extend our reach. Recently, we opened branches in Raipur, Ranchi and Patna.
We are planning to open more branches during the current financial year. Of the 200 branches we opened last, 60 per cent was outside Andhra Pradesh.
This ratio will keep increasing as we go forward. Not that we do not want to open more branches in Andhra Pradesh, but we want to have a wider presence. We have over 1,000 branches in Andhra Pradesh, in addition to several banking correspondents operating throughout the State.
How long does a new branch take to break even?
Depending on the rental and number of employees, it may vary. For us, on an average, it takes 12-15 months. We can break even much earlier, if the number of staff is lesser.
We will need at least 4-5 people in a new branch. All our new branches are giving us good business. For example, last year we opened branches in Kelambakkam, Chitlapakkam, Urapakkam and Sholinganallur — the southern suburbs of Chennai. Within 15-16 months, these branches contributed at least Rs 10 crore of business each.
What is the bank’s total business and how much of it comes from Andhra Pradesh at present?
At the end of the first quarter of the current fiscal, our total business stood at over Rs 2.10-lakh crore. Of this, 50 per cent came from Andhra Pradesh, and the remaining from rest of the country.
What is your turnover target for the next couple of years?
We want to achieve a business turnover of Rs 3-lakh crore by 2015, and we are on track to get there.
Considering the current economic situation….
(He interrupts) Our profitability may come under pressure, due to various provisioning and the general slowdown, but not the topline.
What is your strategy to achieve the growth target?
First, we want to expand our footprint to other geographies, particularly in the South this year. At present, we have 49 branches in this region. We want to take it to 65 by the end of the current financial year. We are planning to set up two branches in Kerala and 14 more in Tamil Nadu, including an all-women branch in Salem in October.
Second, we want to focus more on retail deposits and advances this year with more stress on car loans and the MSME (micro, small and medium enterprise) segment. This year being ‘the year of MSMEs’, we are planning Rs 9,000 crore of additional business from this segment. We have already done about Rs 1,500 crore so far.
There is great potential in this sector. All it requires is a bit of planning and training. As entrepreneurs require some sort of handholding, we need to have some trained people with us. This took some time for us. Now, we are completely equipped. We have posted 600 officers to manage the MSME business.
source: http://www.thehindubusinessline.com / Business Line / Home> Industry> Banking / by R. Ravikumar ravikumar.r@thehindu.co.in / September 02nd, 2013