Hi Guys Thankyou for your view,
I see banks offering 2 thing in a broad view 1 is product and 2nd service. So when I talk about retail customers for them service is a higher weightage than product. Like hardly people use net banking. The mobile app is the only thing which might have significance to retail customer. What matters to retail customer is service and affiliated products. Like IDFC offers 3in 1 with zerodha. If you have an NRI account with axis bank you cannot open account with zerodha.
Where as for corporate customer product has a higher weightage than service. Like in LVB bank if you add a beneficiary you can immediately transfer them money. In other banks it take 30min to 24hrs. How good is the bank in FOREX market. Success ratio in transactions. If you want to put standing instructions then banks need to have tie up with the service provider.
Most of the small banks don’t have a good presence in wholesale banking because they cannot afford to spend in technology and you can just grow to a certain limit if you are totally retail oriented. So when I say wholesale I am mentioning both liability and asset side. So these big NIM for small banks will come down as they grow bigger and it is going to be even more difficult as the grow.
My overall point is if you want to project the growth of smaller banks you cannot project on the basis of current growth. It keeps declining in banks as the grow bigger. Banks also have to raise money time to time to grow and if you see most of the small banks EPS is in single digit and shares price is double digit which means they already have many outstanding shares.
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