EUR 120.00 For Business Accounts Only

MOSL: FINANCIALS- Liability franchise – Version 3.0: Branch expansion back in focus

Financials: Liability franchise – Version 3.0: Branch expansion back in focus

 

• In our earlier twin reports on liability franchise - 'The rising significance of liability franchise' (, ), we had highlighted that the importance of a strong liability franchise will increase as new universal banks and SFBs aggressively chase deposits to drive business growth. We also evaluated trends in deposits build-up across geographies, emphasizing strategy of private banks to expand their presence in top SA-rich states.
• In this note, we have assessed productivity gains that different banks displayed as they built strong liability franchise. Here, KMB, HDFCB and ICICIBC are the clear outperformers. KMB has reflected highest improvement in SA per branch (INR531m in FY19 v/s INR110m in FY15), followed by HDFCB and ICICIBC.
• With several private banks guiding for aggressive branch expansion over FY19-22, we analyzed region-wise SA build-up composition of branches for major banks. We note that private banks have lower branch presence in Bihar/UP/West Bengal (~5%/12%/6% SA market share), despite the three ranking among the top 10 SA states. We believe that the under-penetrated banking regions of West Bengal and Bihar have the potential to emerge as the new bastions for branch expansion.