Equitas Holdings, which started small finance bank (SFB) operations in September, said it plans to add 409 branches by the first quarter of the next financial year.
Of these branches, 50% will be in the southern part of the country, 30% in the west and 20% in the north. The SFB operations had started in Chennai with three branches.
PN Vasudevan, chairman and managing director, said operating costs during the second quarter increased 65% to Rs 140 crore, largely due to costs associated with hiring of 1,600 people. These costs are likely to go up in Q3 and Q4FY17 as the company rolls out more branches and more employees join. “Most amount of the expenses should be incurred this year, so going forward, costs should stabilise,” Vasudevan said during a call with analysts on Monday.
Equitas’ cost of funds decreased to 9.5% from 11% at the beginning of the year. The company said this number will continue to go down as it repays loans from fresh deposits.
Equitas has already begun pre-paying Rs 3,000 crore of debt to reduce cost of funds.
On liability mixes, Vasudevan said while the bank has started collecting deposits, these are largely in form of bulk deposits – CASA operations will begin in November.
Geographical distribution of planned branches will be on hold for some time and the company does not plan to expand to unexplored areas such as Uttar Pradesh or the east. “The areas we are present in right now, are giving us substantial amount of demand – so we want to continue to perform in markets we have good knowledge of,” Vasudevan said.
Equitas on Friday reported a consolidated net profit that grew 16% year-on-year to Rs 46.4 crore for the quarter ended September.
The rise in profit was primarily driven by a 40% growth in net interest income.