Agree, that’s where every bank would want to be over time. Which is why cross selling payments, cards, wealth management and other services come handy, these lock in customers into regular usage and build in switching costs that prevent customers from moving to another bank.
All this takes time, normally takes 2-3 years for a branch to turn in operating profits and around 5+ years for the book to start contributing meaningfully to profits. But once a threshold is reached, profitability is non linear due to a confluence of factors since cost escalation does not keep pace.
Which is why comparing per branch revenue, CASA and profitability with a leading bank is not fair. Even within these large banks, their seasoned branches subsidize the lower throughput from semi urban and upcoming branches. A bank with 50% of the branches opened in the past 3 years will have high operating cost until it hits a threshold size on assets and fee income. But once it hits, operating leverage kicks and spikes the return efficiency rather quickly so long as provisions don’t spike too.
The key is to survive for a long period without credit events that can damage the asset quality significantly.
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