High NIM, reduced NPA boosted Q1 results: Indian Bank

Below is an edited transcript of the interview on CNBC-TV18.

Q: The bank's net interest margins (NIM) this quarter was around 3.03% vis-à-vis 3.15% in the previous quarter. What caused this contraction in NIM?

A: The current NIM of 3.30% is an improvement from Q4 when it was down due to reversal on the NPA accounts. So, the NIM has been maintained better than in Q4.

Q: What exactly would your trajectory be for FY13 then in terms of the NIM? Do you think that you could improve from this 3.30%-mark with regards to the entire fiscal?

A: I think our guidance is that the NIM for the entire fiscal should be around 3.25%. We have reduced the base rate with effect from May 1 2012, from 10.75% to 10.50%, However, we have not been able to reduce the interest rate on deposits due to liquidity conditions. So, that is why there is some pressure on interest paid in our books.

Q: The asset quality has improved quite significantly on a sequential basis. What exactly are your parameters for asset quality in terms of fresh slippages and restructured loans for this quarter as well?

A: We restructured about Rs 1,700 crore of SEBs this quarter also. About Rs 1,052 crore is the cash recovery, out of which Rs 99 crore was used to reduce gross NPAs and the rest has been recorded as income and as profit under assets-under-collection.

There has been upgradation to the tune of about Rs 256 crore and in an earlier interaction regarding the March quarter, I had said that the bank had already recovered the overdue amount regarding some advances.

But we showed them as NPAs on March 31 2012, but since the overdue amount was recovered, these accounts were entitled for upgradation.

An upgradation of Rs 256 crore in working capital loans has resulted in the fall of gross NPA from 2.03% to 1.66%. We have made more than required provision of about Rs 110 crore against the required NPA.