Retail boom may not sustain

Mumbai, Jan 5 | Updated: Jan 6 2006, 06:00am hrs
The current boom in retail credit may not be sustainable in the long run, though demand is expected to continue. State-owned Andhra Bank, in its red herring prospectus filed with the Securities Exchange Board of India (Sebi), said, While we anticipate continued demand in retail, we may be unable to sustain the growth rate of our retail banking business.

The bank is tapping the capital market with a follow-on public issue of 8.5 crore shares. Post-issue, the governments holding in the bank will come down from 62.5% to 51.5%.

The issue will open on January 16, and close on January 20. Expected allocation to qualified institutional buyers will be on February 2, the bank said. As on September 30, 2005, the banks retail loans constituted 20.94% of the total outstanding credit portfolio.

Apart from Andhra Bank, Bank of Baroda is also likely to hit the market the same day with its follow-on public issue to raise Rs 1200-1,500 crore.

Meanwhile, the other issues likely to hit the market this quarter include South Indian Bank (SIB) which has an issue size of about Rs 150-200 crore, and is likely to come in end-January, and Union Bank of India, which is looking to raise about Rs 850 crore. Development Credit Bank (DCB) is also coming out with its initial public offering (IPO) of Rs 150 crore in the second or third week of February.

Also, private sector Federal Banks GDR issue is likely to come by January-end, the size is around $100 million, said sources. Meanwhile, the Andhra Bank scrip closed at Rs 103.45, up 8.55% from Wednesdays close of Rs 95.30.