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Showing posts with label CASA. Show all posts
Showing posts with label CASA. Show all posts

Wednesday, 11 January 2017

09:16

Higher current and savings accounts, credit-deposit ratio helped private banks

Higher current and savings accounts, credit-deposit ratio helped private banks 

Banking sector asset growth has slowed down in the past few years as bankers have turned cautious on asset quality concerns. But among various bank groups, private sector banks have managed to earn better returns on assets and equity compared to their public sector peers. 

An analysis of various parameters indicates that private sector banks have been more successful in raising low-cost funds, that is demand deposits in their current and savings accounts, or CASA. 

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Thursday, 17 March 2016

23:05

YES Bank to ramp up retail portfolio

YES Bank to ramp up retail portfolio

To expand product offerings, launch credit card

MUMBAI, MARCH 16: 

YES Bank has firmed up plans to ramp up its retail banking portfolio, Pralay Mondal, Senior Group President, Retail & Business Banking, said.

Retail assets that currently constitute a third of the bank’s total advances, are set to touch 45 per cent in the next four years.

This will balance the pronounced tilt towards wholesale/corporate banking seen currently. As part of its retail development plans, the bank is also widening its bouquet of offerings and will be launching a credit card in the next quarter.

YES Bank expects to grow at between 25 and 30 per cent during the next four years and more than double its current market share to about 2.5 per cent, Pralay said.

As part of the plans to prepare for this ramp up, the bank’s branch network currently about 800 is set to treble and reach 2,500 branches by March 2020. Manpower working in retail currently numbering 11,000 out of 14,000 employees will double in the next 18 months, Pralay said.

Processing hub
He added, “We are investing significantly in infrastructure and technology. We have taken 7-8 lakh square feet area in Chennai (in Ambattur) to set up our central processing hub for handling all our back-end operations. We are investing significantly in building leadership at both HO and regional levels.”

CASA deposits
With expansion and moving into deeper geographies, some of the bank’s key parameters will be further strengthened, Pralay said, citing the example of current and savings ratio (CASA).

He said CASA was expected to move up significantly from around 27 per cent of total deposits currently to 45 per cent in four years. Similarly, the total retail deposits (CASA plus term deposits) is expected to touch 75 per cent, from about 50 per cent now.

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07:59

CASA campaign launched by the Bank from 15.02.2016 till 30.04.2016

CASA campaign launched by the Bank from 15.02.2016 till 30.04.2016


Ref.: Com/EC/ 16 /2015-18 

March 14, 2016

All Office Bearers, EC Members & Units

Sub: CASA campaign launched by the Bank from 15.02.2016 till 30.04.2016

We reproduce hereunder the full text of our letter No. Mg/ 28 /2015-18 dated March 14, 2016 addressed to the General Manager, Strategic Planning & GAD on the above subject for information of all concerned.

 S Roy Choudhury
 General Secretary
Quote

“We are in receipt of your letter no. HO/SP-RL/2015-16/72 dated March 7, 2016 on the above subject along with Bank’s Circular No.CHO/SUA/24/2015-16 dated 12.02.2016 as enclosed with your letter under reference.

We have gone through the contents of your letter as well as Bank’s circular dated 12.02.2016. We are deeply concerned to note that as on date the progress is not as per the targets set for weekly  CASA growth inspite of whole-hearted efforts taken by the Bank.

In this connection, you may note that most of the Unions/Associations in the Bank are always genuinely concerned about the well-being of the Bank. In recent past, during the tenure of Shri Arun Kaul, our former CMD, being confronted with the basic issues and observing management reluctance to carry the unions along the path of growth and create an environment of motivation, dedication among the employees, four unions viz. AIBEA, BEFI, INTUC and our Federation  consciously decided not to participate in the Apex level Performance Review Meeting on 10th April,2015 which had been called ritually without any concrete future roadmap or projections.

We would like to recall the discussions we had during the deliberations in the Apex Level Performance Review Committee meeting held on 19th January, 2016. In the said meeting, besides many other suggestions, we the unions and associations laid emphasis on the following. 

• Sensitizing the work force to the prevalent situation in the Bank, consequent to sharp decline in the current deposits of Iran related accounts and the need for replenishing the gap,

• In order to sensitize the work-force, there can be cluster meetings in different centres so as to use such gatherings effectively both by the field level executives and union functionaries to motivate the people for taking extra-ordinary efforts towards strengthening the CASA deposits,

• To unleash a country vide campaign observing CASA fortnight.

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Saturday, 5 September 2015

09:00

New base rate based on marginal costs could push banks to revise rates at a speedier pace: BoAML

New base rate based on marginal costs could push banks to revise rates at a speedier pace: BoAML

The new base-rate formula proposed by the central bank linking lending rates to marginal cost of funds rather than average cost of funds could push banks to revise rates at a speedier pace than before, said a report by Bank of America Merrill Lynch (BoAML).

This will be particularly the case for banks with high base rates ( the rate below which banks cannot lend). " ... In a falling rate environment, the new "base-rate" formula may push banks to lower rates more than earlier, especially banks that have high base rates and were using average cost of funds" said the BoAML report released on Tuesday. The average cost of funds is sticky and takes time to fall, while the marginal cost of funds is likely to fall more quickly, as banks cut deposit rates. "It may force banks to cut rates more sharply, which appears to be a key objective of the RBI. It could, however, make base rates much more volatile" It added.

The RBI just released draft guidelines on base rates, to be effective from April 1, 2016, once the guidelines are finalised. As per the draft guidelines, banks will have to use the marginal cost of funds as the key input. Until now, banks could set their base rate (minimum lending rate) after determining a spread over their total costs, factoring in operating costs, cost of funds and the minimum return on equity they deem adequate.

The 35 bps (one basis point is 0.01%) base-rate cut by HDFC Bank is also likely to push banks to consider faster rate cuts. Given the low loan growth and incremental loan to deposit ratio of less than 35%, BoAML expects banks to begin cutting both deposit and lending rates. "We reiterate our view that banks are likely to cut by at least 75bps and could even hit 100bps in FY16, especially if the RBI cuts rates." It said

HDFC Bank, having just 20-25% "base rate- linked loans and current and savings accounts or CASA higher than 40% is likely to see minimal margin pressure. ICICI Bank, too, could see less margin compression, owing to its much faster growth of domestic loans compared to overseas (on which margins are half). Government banks, in contrast, could see a much greater impact on margins. Hence, we may see more limited rate cuts by them, as their funding costs are also likely to be higher (owing to unallocable costs). SBI may be relatively better positioned owing to its high CASA. Ends

Retail loans may get a fillip from rate cuts, being the most sensitive to rates. Private banks, with a 34% share of the retail loan market, are likely to be the key beneficiaries of rate cuts, especially the larger ones that have the lower base rates and a more dominant share of the retail market.

Banks to use marginal cost of funds for setting base rate

The RBI just released draft guidelines on base rates, to be effective from April 1, 2016, once the guidelines are finalised. Until now, banks could set their base rate (minimum lending rate) after determining a spread over their total costs, factoring in operating costs, cost of funds and the minimum return on equity they deem adequate. The key is that banks had the option of using either the average cost of funds or the marginal cost of funds.

As per the draft guidelines, banks will have to use the marginal cost of funds as the key input. They can still adjust for the negative carry of SLR and CRR and also add unallocable costs and determine their spread based on the minimum RoE that banks need to earn. The RBI just released draft guidelines on base rates, to be effective from April 1, 2016, once the guidelines are finalised. As per the draft guidelines, banks will have to use the marginal cost of funds as the key input.

Until now, banks could set their base rate (minimum lending rate) after determining a spread over their total costs, factoring in operating costs, cost of funds and the minimum return on equity they deem adequate.

Source :Bank Updates
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