Public sector lender Syndicate Bank reported a surge of more than 50.3% in net profit (year-on-year) to Rs 508 crore, aided by a one-off tax write back of Rs 141 crore.
Speaking to CNBC-TV18 about the financial performance of the bank, chairman and managing director Madhukant Girdharlal Sanghvi said, "The tax back credit has been utilized for providing extra provisioning. We have improved our NPA provision coverage to 83 percent, which is one of the highest of the industry."
Net interest income (NII) grew by 5.6 percent to Rs 1,399.8 crore from Rs 1,325 crore during the same period. Their restructured assets marginally increased by about less than Rs 1000 crore in this quarter.
Bank's loan book in Q3 grew 17% on year-on-year basis. "This is marginally less than the market. But the bank is taking all efforts to improve it in the quarters ahead. On the retail assets side, we have reduced interest rates and process fee charges have been waived. We are very confident of growing the book nicely in this quarter," he added.
At 15:01 hrs Syndicate Bank was quoting at Rs 132.00, down Rs 7.60, or 5.44%.
Below is the edited transcript of his interview to CNBC-TV18
Q: While your asset book that is gross and net NPLs are lower from what they were in September, we don’t see any growth in net interest income or in profit. Why is growth suffering so much?
A: The profit is not down. It is up by 41 percent in 9 months and year to year it is a 50 percent growth.
Q: The profit is higher because you have written back tax credit of Rs 140 crore.
A: The tax back credit has been utilized for providing extra provisioning also. We have improved our NPA provision coverage to 83 percent. This is one of the highest of the industry. We have done extra provision for wage revision. We have done very liberal provision to ensure that our future burden is not there.
Q: A lot of other banks have also reported loan growth and some of them have shown moderation in it. How do you see those prospects?
A: Loan growth side we have year to year growth of 17 percent, marginally less than the market. However, considering the economic condition and the banks high level of NPA in the past, we have done entry level barriers of new business group. We have selectively taken the customer.
Last quarter growth has substantially improved. Lot of exercise is on the way, we will be able to do in next quarter. On retail assets side also we have reduced interest rates. Process fee charges are waived. We are very confident of growing the book nicely in this quarter.
Q: Can you tell us what is your net interest margin in Q3 and how does it compare to Q2?
A: This is 3.27 in December 2012 quarter. In September it was 3.26. Compared to the year back it is marginally less. However, in present scenario, 3.27 should be appreciated. Net interest income is also up by 9.60 percent in 9 months.
Q: What about restructured assets and fresh slippages? How much of your loans were fresh entry into the non-performing loans (NPL) category in the Q3 as well how much did you restructure?
A: The restructuring portion has marginally increased in this quarter by about less than Rs 1000 crore. The NPA side, the first two quarters the slippage was more than Rs 1000 crore while this quarter slippages reduced to Rs 900 crore. However, the recovery and upgradation has substantially helped us to improve it. If you see the NPA analysis, the last quarter we had technical return of Rs 400 crore, this quarter is only Rs 200 crore.
Q: How much was the recovery and upgradation?
A: Both the figures are quite encouraging. The recovery and upgrdation both are substantially high compared to the past. Cumulative slippage of March 2012 is Rs 3156 crore and Rs 900 crore is of the last quarter.
The recovery on 9 months ended December 2011 was Rs 534 crore. Now it is Rs 838 crore, which is Rs 300 crore more. The upgradation, last year was Rs 613 crore, now it is Rs 844 crore. So, Rs 230 crore more in this quarter, while write off has reduced.
Q: So you could get about Rs 400-500 crore through upgrdation and recovery in this quarter alone. You said you restructured Rs 1000 crore, what is the total restructured book?
A: This quarter’s restructured book is Rs 1000 crore. The total book is around Rs 10000 crore.
Q: Are you getting a sense at all that this is the last or do you think that even in the fourth quarter you could have restructuring and slippage problems?
A: Small amount, about Rs 500-600 crore are under process. However, for those accounts we have already provided for in P&L account.