IDFC Bank to merge lending divisions, trim workforce

Mumbai: Private sector lender IDFC Bank Ltd is close to merging various lending divisions with a plan to reduce headcount, two people aware of the matter said.

The bank plans to merge corporate lending and middle market corporate lending into a single division while SME (small, medium enterprises) lending and business banking will also be merged into another division, said the first of the two persons on the condition of anonymity. Each division has 40 to 60 employees across the country, this person said. Revenue generated by each division is not known.

“This is an internal realignment to enhance our client coverage model and increase operating synergies. These changes will build on the significant momentum that the wholesale bank has acquired in the first year of the bank’s operations,”said an IDFC Bank spokesperson.

In the last couple of years, IDFC Bank has hired a number of senior executives to expand lending. Hansraj Thakur, SME head at IDFC Bank, was hired in January 2016 from Standard Chartered where he spent eight years heading Medium Enterprises and High Value Small Business (HVSB).Rakesh Bhutoria, Group EVP & head- commercial bank, private equity and ECM at IDFC Bank, was hired last year from Standard Chartered where he was working as managing director. Prateek Indwar, senior executive vice-president at IDFC Bank, was hired from ICICI Bank to head corporate banking in 2014. Bhavesh Gupta, senior EVP and head-business banking at IDFC Bank, was hired from ICICI Bank in 2014.

“There is no big people movements as such. We are doing what every good business does, which is trying to reorganize our operations in a way that gives us maximum productivity. There will be some small layoffs, but like any good organization, we will be helping them transition to new organizations with requisite references and other kinds of help,” said a senior official of IDFC Bank, seeking anonymity as he is not allowed to be quoted in the press.

IDFC Bank has four main business divisions: Bharat Banking, personal banking, business banking, and commercial and wholesale banking. In the quarter ended 30 September 2016, IDFC Bank reported a net profit of Rs387.76 crore, against a profit of Rs265 crore in the quarter ended 30 June. IDFC Bank started operations on 1 October 2015, so the figures cannot be compared on year-on-year basis.

The bank’s total income for the second quarter was reported at Rs 2,493 crore, as compared with Rs 2,188 crore in the first quarter. Net interest income for the July-September period was at Rs 495.6 crore, marginally lower than Rs 498.87 crore reported in the April-June quarter.

The gross non-performing loans (NPL) and net NPL of the bank as at the end of the quarter stood at Rs 3,220 crore and Rs 1,271 crore respectively. Gross NPL as a percentage to gross advances stood at 6.0% and net NPL as a percentage to net advances at 2.4%.

In recent past, several private banks have downsized their operations in various segments. In October, FirstRand Bank decided to shut its retail and SME lending business in India.