Alpha Ideas

(Disclosure:I am market making in the shares of RBL Bank)

Attended the RBL Bank AGM yesterday in Kolhapur.

Here is what I heard and saw:

1. The hall was packed with shareholders.The Bank certainly enjoys a strong emotional connect with its local shareholders (see pic)
2. The MD & CEO Vishwavir Ahuja addressed the shareholders.He spoke in Hindi so that the audience was comfortable
3. In his speech, he mentioned the following:
   • That the Bank has grown considerably in the last four years
   • That  on some parameters like NPAs etc, it is the best bank in the country
   • That the RBS acquisition was a success and the positive impact will be felt in this years results
   • That the fund raising in March was successful and RBL Bank is the only bank in the country to be backed by marquee investors IFC and CDC
   • That the Board has initiated the IPO process and there would be an EGM in the near future to take shareholder approval for the same
4. The New Chairman Narayan Ramachandran then addressed the shareholders.He made a very strong statement “The Board of Directors of this Bank will ensure that this Bank will not only grow but we will hold our head high about how we grow“. I found this very reassuring
   
5. The floor then was left open for Questions
6. One shareholder asked about the falling NIM(2.84 for FY2014). The MD explained that the desirable NIM for a growing bank is 3. The NIM of the Bank had fallen due to fresh capital infusion in March 2014 and would increase this year
7. One shareholder wanted to know the branch expansion strategy of the Bank.The MD explained that there are 20/25 important financial centers in the country that every National Bank needs to have a presence.He also mentioned that RBL Bank will cross 200 branches this year.He mentioned that on average it takes a branch to 2-2.5 years to break even and they want to grow slowly but steadily on this front
8. Some shareholders had an issue with the Bank being renamed from The Ratnakar Bank to The RBL Bank.The MD explained that this was necessary from a branding perspective and for the future growth of the bank.By renaming it RBL Bank instead of a completely new name, the link with the past and the legacy is maintained
9. Then the Agenda was taken up.The resolutions were passed unanimously by the shareholders
10. The resolutions were:

• Adoption of Accounts
• Approval of Dividend of Rs.0.90
• Reappointing of auditors Batliboi and appointing of Branch Auditors
• Appointment of Vimal Bhandari,Sudhir Rao,Jairaj Purandhare,Kiran Patil,Narayan Ramachandran,Girish Godbole,D Sivanandhan and Rama Bijapurkar as Independent Directors
• Approval in remuneration of the MD
• Approval in increase in borrowing powers of the Bank
• Changing the name of the Bank from ‘The Ratnakar Bank’ to ‘RBL Bank Ltd’

This concluded the proceedings of the AGM.