Eyeing 22% YoY growth in advances for FY12: Karnataka Bank

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Eyeing 22% YoY growth in advances for FY12: Karnataka Bank

Managing director of Karnataka Bank P Jayarama Bhat tells CNBC-TV18 that they aim to grow total advances by 22% year on year for FY12.

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Managing director of Karnataka Bank P Jayarama Bhat tells CNBC-TV18 that they aim to grow total advances by 22% year on year for FY12. "Also, because there is good credit growth in the retail sector, we expect to grow by 35-40% there," he added.

In the quarter gone by, Karnataka Bank saw an increase in NPAs due to bad loans from exporting sectors like rice, diamonds and garments. "But we aim to lower this to q.501.75%," he said.

Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: You've got targets of lowering the net NPA level to 1.5-1.75%. With what happened in the current quarter, do you think you are on target for doing that?

A: As far as asset quality is concerned, this accounts are old accounts which we are in the process of recovery, we are in the final stages. In fact, we were expecting this recovery in this third quarter but it has skipped into the fourth quarter now.

In the fourth quarter, we are expecting a total recovery of around Rs 150-200 crores. That's how I have projected my NPA at around 1.75% and also gross NPA, which is at 4%, I am trying to see that it comes within 2.75%.

Q: From which category primarily have these bad loans occurred?

A: These are in export sectors like in basmati rice export, diamond sector and also in the garment exports. These are likely to be recovered in this fourth quarter.

Q: You have been quite aggressive on retail advances this quarter. What is the target for the full year for your bank in terms of advances and what that would mean for your net interest income?

A: I have the target of 25% growth in advances and as of third quarter the year on year (YoY) growth was 21% and we hope to maintain around 22% YOY growth in the advances. In the retail sector, we are growing at an average growth rate of 30-35% and we want to maintain that around 35-40% growth in the retail sector.

Q: You think you can grow at your credit at this kind of rates without impairing or endangering asset quality?

A: Yes, we can grow not at 25%, we can grow at around 20-21%. There is good credit growth in the retail sector and there I can sustain the growth of around 35%.