NIMs to stablise at 3%, NPAs in focus ahead: Karur Vysya Bk

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NIMs to stablise at 3%, NPAs in focus ahead: Karur Vysya Bk

Karur Vysya Bank has posted about 35% growth in deposits, advances and the overall business. K Venkataraman, managing director and chief executive officer of the bank spoke to CNBC-TV18 about the prospects going ahead and gave an insight into the third quarter numbers.

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Karur Vysya Bank has posted about 35% growth in deposits, advances and the overall business. K Venkataraman, managing director and chief executive officer of the bank spoke to CNBC-TV18 about the prospects going ahead and gave an insight into the third quarter numbers.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Take us through the highlights of this quarter what have you done in terms of NIMs because we understand that the profitability and the NII of the company was up over 10% on a year on year basis?

A: The profit after tax for the quarter has gone up by 18% that is for nine months period year-on-year from Rs 300 crore to Rs 355 crore, and net interest income has also gone up around 18.76%. The overall business has increased to Rs 52,000 crore, a rise of about 35%. The deposits grew from Rs 22,000 crore to Rs 30,000 crore, again around 35% year-on-year, and advances grew from Rs 16,500 crore to Rs 22,283 crore, about 35% yet again. The gross NPA declined from 1.54 to 1.48% year on year. The net NPA is 0.29% with a coverage at 80%.

Q: I didn't get quite hold of what the net interest margins has been for the quarter and how do you expect it to move from hereon?

A: Net interest margin is at 3.06%

Q: From hereon where do you expect the NIMs to stabilize at?

A: NIMs will stabilize. We expect that the pressure on the margin is likely to ease in this quarter because of the cut in CRR and maybe expected rate easing. Also we are going to focus more on NPAs during this quarter, so the pressure on margin is likely to come down and the NIM will maintain or slightly improve.

Q: Could you tell us how the asset quality has been this quarter. You gave us what the gross NPA and everything has been but in terms of the fresh slippages and how it compares or even any kind of recovery that you have seen because there has been an increase in provisions on a quarter on quarter basis that the bank has seen this quarter?

A: That is right. The NPAs increased quarter on quarter by Rs 30 crore, slightly larger accounts and the provisions increased on account of NPAs because of 80% provision coverage. Even for a sub-standard asset, we have to provide at least 80%. Standard of provision has been increased and also provision on account of depreciation, investments has increased. This we expect to come down because this quarter the prices are going up and the interest rate coming down, so maybe this can come down and with our focus on NPAs recovery, we hope to reduce the provision on NPAs in this quarter.

Q: Where exactly did you see the maximum pressure in terms of slippages?

A: It is basically widespread. I would say very small amount of expectation. As far as this quarter is concerned, we do not expect much of slippages. We have been tracking accounts which are delinquent, accounts which are irregular. We do not expect any large accounts to slip during this quarter. On the other hand, we expect larger recoveries. The slippage was Rs 30 crore last quarter, that is December quarter, and this quarter, we do not expect anything in that range.