NIMs seen at 3.5% by end of FY13, says PNB

Q: What do you expect will be in terms of fresh slippages? Will it be around the levels that you are talking about? Are you expecting it to get a little lower since perhaps most of the weak assets have fallen?

A: Bankers are always optimistic. I always think that things will get better from here. We are the barometer of the economy. So I only reflect what is the stress in the economy. So the moment the stress factor cools off a little, being a large bank I would get the maximum benefit out of it. But going forward it is very difficult for me to predict them.

All I can say is in case slippages are higher, recoveries would also be high because when the economy is in a stress situation there is hardly any credit which is coming up.

So credit will not grow at the rate it was growing in the past. The entire management bandwidth concentrates on recoveries and then arresting fresh delinquencies. Now the moment your monitoring is better, delinquencies also tend to get arrested to that extent of the effort applied on them.

Q: What is your likely deposit growth and loan growth in the current year?

A: We have always been growing about 100-200 bps above the RBI guidance. RBI guidance this year is 16 and 17 if I am not mistaken. So maybe around that I would be comfortable.

Compared to what I had grown last year that would give me sufficient bandwidth to concentrate on this. Last year we closed the year at about 24%. So 24% to 16%-17% would be something which would be quite a sharp drop.

Q: What about bulk deposits. How much do you think you can still retire and therefore what are you looking at in terms of net interest margin for the rest of the year?

A: My guidance for the entire year was 3.5. Regarding bulk deposits we were 24% last year. We are already down to 22%. Now we are suppose to bring it down to 15, which means that about 5% every year. We will definitely work towards that.

Q: You said your slippages were 2,700 crore of where there were two bulky accounts. How much those two big accounts account for, the Hyderabad accounts?

A: About Rs 600 crore. The next five accounts amounted for another 400 crore and the next 50 after that for the next 1,000 crore. But there was no concentration in any sector. It was just these two large accounts which in totally unrelated sectors slipped somehow. Let’s see.

We are working on it. But one point in relevant in these past 20 odd days out of the slippages which have happened in the first 15 days about 220 crore have already been upgraded out of the slippages which is reflected in this 2,700 crore.