Jan 29, 2013 09:13 AM IST | Source: CNBC-TV18

Gross, net NPA to reduce significantly in near term: BoI

VR Iyer, CMD, Bank of India, says that Bank of India sees fresh slippages at Rs 1200 crore. However, the banks do not expect to see more slippages in Q4 and going forward. She also feels that gross and net NPA will come down significantly in near term.

Bank of India (BoI) Monday reported 12.15 percent rise in net profit at Rs 803.48 crore in the third quarter on the back of growth in core income supported by other income and decline in tax outgo. Speaking to CNBC-TV18, chairman and managing director VR Iyer says the state-owned bank, which saw fresh slippages of Rs 1,200 crore in Q3, does not see more slippages in the coming quarters. She also feels that the gross and net NPAs will come down significantly in the near-term.

Below is the edited transcript of her interview to CNBC-TV18.

Q: In this quarter BoI announced restructuring of about Rs 2000 crore, which accounts were restructured and what percentage of total loan book is currently restructured?

A: The overall restructured portfolio percentage is 6.67 percent. In the last quarter it was 6.87 percent. I can't comment on individual accounts but I can assure that these accounts are only having temporary aberrations due to economic slowdown and these will definitely get upgraded. These accounts have been restructured to the amount of Rs 2200 crore. But in the same quarter we have recovered more than Rs 1200 crore from the restructured accounts.

Q: How much fresh slippages and what are the early signs that you get with respect to Q4 and the restructured accounts, the up gradations as well as slippages?

A: Slippages during the current quarter is around Rs 1200 crore and this includes one account from steel sector. One account constitutes almost 55 percent of the slippages. Out of Rs 1220 crore, we have about Rs 500 crore plus for the restructured accounts. If we exclude that account then the slippages have been very low. The slippages are abating, in the next quarter we don’t see much slippages. Our recoveries and upgradation will much more than the slippages which we expect in January to March quarter in 2013. According to our guidance our NPA level will come down from 3.14 to 2.90 and net NPA will also come down to 1.75 from 1.91.

Q: The net interest income (NII) growth this time around we have noticed that in most banks the top-line growth has been extremely abysmal. You as well have seen just a 12 percent growth this time around. Are you facing any kind of sluggishness and what kind of guidance do you think you can give going ahead?

A: The top-line growth is a reflection of the economy. We are not seeing new projects coming in large corporate sector and infrastructure segments. Earlier growth has been the result of draw downs of the earlier sanctions in the pipeline. Our growth on the credit from April onwards is around six percent on the domestic side; we are doing extremely well on the international side. It has been around 27 percent excluding the currency depreciation. So, we are expecting overall growth of around 17 percent for the current financial year.

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