At a time when non-performing assets (NPA) have been the bane of the banking industry for quite a while, Madhukant Girdharlal Sanghvi, CMD, Syndicate Bank, says the bank’s asset quality has improved on a sequential basis, largely due to aggressive recovery drive on non-performing assets (NPA) for large and small accounts too.
Talking to CNBC-TV18 about the bank’s net interest margin, he says the bank could touch 3.19 percent as against 3.43 percent last year, and the base rate was reduced twice during the last one year.
Here is the verbatim transcript of his interview with CNBC-TV18
Q: It has been very good set of numbers for you this quarter. Can you first start by taking us through the net interest margins (NIM) this quarter?
A: NIM of Syndicate Bank this year is 3.19 percent.
Q: What is it exactly for the quarter?
A: For quarter it is 3.20 percent.
Q: The asset quality this time around has improved on a sequential basis for you all in terms of performance. Can you just take us through two key parameters - the slippages and restructured assets?
A: We have done aggressive recovery drive on non-performing assets (NPA) for large accounts and small accounts and we have separates small accounts. We have started regional offices to support rural branches. We have given simplified settlement schemes and it has helped us with sizable recoveries in upgradations and credit monitoring system. This has helped us to arrest slippages.
Q: Can you just give me exact figures. For Q4, what did you do in terms of recoveries plus upgrades. What did you do in terms of fresh slippages and in terms of fresh restructured assets, incremental restructured in terms of your books?
A: The quarter ended March 31, 2013 we had the restructured book reduced compared to the December quarter by Rs 900 crore., There was a increase of Rs 700 crore and reduction in restructure book because of the revised Reserve Bank of India guidelines, certain accounts which have performed well have been taken out.
Q: Fresh slippages?
A: Fresh slippages have been substantially arrested. Yearly figure say NPAs slippage is Rs 2,142 crore versus last year’s figure of Rs 3,156 crore.
Q: What is your cumulative restructured book stand at now?
A: Cumulative restructured book is at Rs 9,200 crore.
Q: What did your recoveries and upgrades look like this quarter and what is the trajectory that we can expect going forward?
A: The recovery in the year ending March 31, 2013 is Rs 940 crore and upgradation Rs 301 crore, totalling Rs 1,241. This is after controlling the slippage which was substantially higher in earlier period – we have reduced slippages by Rs 1,000 crore this year.
Q You did mention that your NIMs are at 3.20 percent this quarter. That would be a reduction of around 7 basis points?
A: No. Last year was 3.43 percent and it is reduced over a period. We could make out 3.19 in this present condition where base rate was reduced twice during the last one year.
Q: Your profitability has actually improved because of a tax write back which you have in the last quarter as well as one – what is the trajectory on the profitability that we can expect for the bank?
A: We have taken the benefit of MAT credit as well as other deferred tax assets and this is in strict compliance to the accounting standard of Institute of Chartered Accountants in India and to the satisfaction of auditors and experts opinion.
But this credit has been taken off Rs 570 crore and the bank had done aggressive provisioning for standard assets, restructured books, accounts which are under restructuring not requiring provision on March 31, 2013.
We have made higher provisions for wage revision, higher provision for AS 15 and also for normal standard assets which are having a problem area.