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Apr 15, 2013, 03.17 PM IST | Source: CNBC-TV18

Hope to maintain NIMs at 3-3.25% ahead: DCB

DCB's fourth quarter net profit doubled from about Rs 17 crore to Rs 34 crore year-on-year driven by higher interest income. MD & CEO Murali Natrajan said the bank's full year growth in advances stood at 25 percent and deposits growth at 32 percent.

DCB 's fourth quarter net profit doubled from about Rs 17 crore to Rs 34 crore year-on-year driven by higher interest income. MD & CEO Murali Natrajan said the bank's full year growth in advances stood at 25 percent and deposits growth at 32 percent.

He added the bank has been consistenly following the same growth strategy for the past four years.

“However, this year our growth in micro, small and medium enterprises (MSME) and small and medium enterprises (SME) is muted. It is about 6 percent primarily because of the challenges that we saw in the environment. We reshaped the strategy within the SME and MSME,” he said in an interview to CNBC-TV18.

Natrajan is hopeful that the bank will maintain net interest margins (NIMs) in the range of 3-3.25 percent going ahead.

Below is the verbatim transcript of Murali Natrajan’s interview on CNBC-TV18

Q: Credit growth has not been a very uniform picture across banks at least at the end of the third quarter. What have you done by way of credit growth, loan growth and deposit growth? What accounted for this fairly decent net interest income (NII) growth?

A: The full year growth in advances is about 25 percent and deposits growth is 32 percent. We have not changed any strategy and have been consistently following the strategy for the last four years of focusing on SME, micro, small and medium enterprises MSME, corporate, agri-inclusive banking and retail mortgages. However, this year our growth in MSME and SME is muted. It is about 6 percent primarily because of the challenges that we saw in the environment. We reshaped the strategy within the SME and MSME.

In terms of customer deposits, we continue to perform strongly. Our CASA grew by 12 percent, savings grew by 15 percent and the total deposits grew by 32 percent thereby achieving 30 percent growth in our balance sheet year on year.

In terms of net interest margins (NIMs), we started focusing on doing priority sector lending more directly rather than relying on portfolio buy outs, that has improved our yield. We have also raised capital in March 2012 which has helped. We maintained our yield on advances and controlled the cost of deposits. All that led to a slight uptick on our NIMs. Even yield on securities was slightly better than last year.

Q: Can you improve your NIMs from the current 3.52 percent in FY14?

A: 3.52 percent was the last quarter number and full year number was 3.34 percent. I don't think it is possible to increase the NIMs. We will try to operate in the corridor of 300-325 bps. I would be happy if the NIMs don't slip. The idea is to create a portfolio mix such that the risks are diversified at the same time NIMs are protected.

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READ MORE ON  DCB , SME, MSME, NII, NIMs, NPAs, CASA
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