Public sector lender, Allahabad Bank is planning to extend its reach in the country further by setting up more branches. The lender plans to increase its branch network by 25% in the upcoming few quarters. This move, the bank feels would help it cover up profit margins which are under pressure.

The bank aims to set up 600 branches and 1800 ATMs especially in the tierII and III cities which currently have a growth rate faster than metros and TierI cities. The lender currently has 2400 branches and 212 ATMs in its kitty.

"I prefer the organic route for growth and leverage our existing strength of an extensive network of branches," Allahabad bank chairman and managing director JP Dua said.

"We would also add more branches and especially expand our ATM network to attract fresh customers ," he added.

"There is tremendous pressure on net interest margin and profitability following the deposit rate rise," said Mr Dua. "We can't just pass on every rise in cost to our borrowers. Yet, we expect to maintain 3% NIM for the third quarter."

The bank expects that it is going to benefit from retiree client base consisting of 1.70-lakh pension accounts. "They are the biggest savers and we will convert the cell into a profit centre by streamlined marketing efforts," he said.

In addition, the bank plans to set up centralized loan processing centers in different locations in the country. This is expected to give a pump to retail lending portfolio. "Such centres help reduce reaction time for lending and churn volumes," Mr Dua said.