What advantage does the bank derive from its merger with ALFL?
In a nutshell, this merger allows the bank to use its stable low-cost deposits for deployment in ALFLs high-yielding assets. Before the merger, ALFL had high-yielding assets because they were into commercial vehicles and two-wheeler loans at yields of 12 to 12.5%. The flip side was that while they had the ability to put on high-yielding assets, their funding base had its limitations both in terms of quantum as well as cost. Banks, on the other hand, have no problems in raising low-cost funds. The problem we faced was that the kind of loans we extended were typically to good quality corporates at 7% to 8%. Our advantage was stable low-cost funds and the disadvantage was we couldnt put on good quality, high-yield assets. If we were a standalone bank, then earning such high yields would not have been possible. What are your growth plans? Traditionally, we were into wholesale banking. This was partly because we had only 71 branches. With the merger, the total branch count will go up to 200
