See mid-teen RoE from rural banking in 3-4 yrs: IDFC's Lall

IDFC Bank shares made their debut on the bourses today. Rajiv Lall, MD & CEO told CNBC-TV18's Ritu Singh that it will take at least six to seven years to breakeven in the personal banking and business banking space. At the same time, he is hopeful that rural banking will break even in three to four years.This is what he had to say about IDFC Bank's road ahead: "We will start with a Rs 1,000 crore of profit so we are way beyond breakeven. The only thing that we need to calibrate is the pace at which we will reinvest our profits into building out the new businesses. There are three businesses that comprise the bank – wholesale commercial, personal and the business banking and rural banking. Rural banking is less costly to build out, will be cash break even much sooner and will actually generate a return on equity (RoE) that we expect will be in the mid-teens within the next three to four years. It is the personal banking and business banking franchise which will be the heart of our liabilities mobilisation in the top 50 centers of the country. That will take longer to break even because it will be equally focused on liabilities as it will be on the asset side. So, the asset side of that franchise will actually mitigate the cost of fighting for our share of the saving deposits. However, that is a battle and that will take time. So, that could take six- seven years for us to break even in that business. So, if you combine the three businesses, then we think in the next five to seven years, from return on assets which will be closer to 1 percent right now, we will clamber back up to 1.5 percent plus."