IndBank Merchant Banking Services, a subsidiary of Indian Bank, expects to more than double its turnover on share broking business to Rs 5,000 crore (Rs 50 billion) in the next two years on hopes that the stock market would stabilise by the middle of next year.
The market, which has been hit by global meltdown, would stabilise within a period of 16-18 months and by July-August 2010 the volume should rise, IMBS chairman and executive director of Indian Bank A Subramanian told reporters.
As on January 1, 2009, IMBS netted Rs 1,500 crore (Rs 15 billion) from share broking business and the year would end up with Rs 2,000 crore (Rs 20 billion), which was almost equivalent to the previous year's performance, he said after inaugurating the 12th branch of IMBS in Tiruchirappalli on Thursday.
Despite the global meltdown and southward movement of share broking business across the country, he was hopeful that with an improving market IMBS would surpass Rs 5,000 crore (Rs 50 billion) business in the next two years.
According to him, out of the total investors in shares, 40 per cent are involved in trading, 30 per cent on short-term investment and remaining in long-term investments.
As of now, the IMBS had 12 branches and before end of this fiscal another 18 branches would be added in main locations, including Kolkota, Vadodhara, Jaipur, Rajkot, Mangalore, Salem, Thanjavur and Pune.
Besides, the bank was hosting 15 exclusive stock trading terminals manned by its employees in busy residential and commercial locations in Chennai and some other places in the country and this would also be enhanced to 200 within a period of two years in a phased manner, he said.
Subramanian claimed that the IMBS' customer base for share broking and other merchant banking activities and advisory services was close to 25,000 and by end of this year this figure would increase to 35,000 plus. The customer base would surpass the one lakh mark in two years, he added.
Answering a query, he said the turnover on distribution of mutual funds and other investment products was Rs 800 crore (Rs 8 billion) last year and the IMBS was hoping to repeat the same in the current fiscal too.
Later, talking to PTI, he said the strength of IMBS was the 'strong' customer base of Indian Bank, which caters to 21 million subscribers through 1,570 branches across the country.
In Tamil Nadu alone, the bank had 670 branches and a customer base of over 10 million. Andhra Pradesh and Maharashtra were two other states with a good subscriber base.
To a question whether Indian Bank had neglected the North East, he said the bank had 25 branches in seven states in the region, with a circle office in Guwahati.
He also said that IMBS favoured direct access to retain customers and hence did not go for acquiring small stock brokers or franchisee operations.
Stating that the current net worth of IMBS was Rs 64 crore (Rs 640 million), he expressed hope that it would increase to Rs 100 crore (Rs 1 billion) before the end of the next fiscal.
For the last two years the bank had been yielding handsome dividends to the stakeholders and would continue to offer the same in future, he claimed.
On new products and services, he said the IMBS was focussing on strengthening the share broking activities and had no plans to embark on forex trading.