The reason for poor financial performance is merger
- costs have gone up due to high cost deposits from HDFC and higher statutory reserve requirements. the solution is degrowth !! Management had thought they will get leeway from RBI but did not.
- No operational gains are visible – while people are saying it will happen over time it may never happen at all !!
- Technology wise, Service wise – competition is far better.
The bank is grappling with the merger and missing out on the growth opportunities which banks like ICICI are capturing. It may take a few years for the bank to come back and then too the return metrics may not be great. Will prefer to stay out and watch…
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