Deepak Narang, ED, United Bank of India explains on CNBC-TV18, after the announcement of results, that the bank's net profit was affected by increased provisioning for Kingfisher Airlines this quarter followed by provisions for transport, IT, iron and steel. He expects a pick-up in recoveries going forward.
Deepak Narang, ED, United Bank of India explains on CNBC-TV18, after the announcement of results, that the bank's net profit was affected by increased provisioning for Kingfisher Airlines this quarter followed by provisions for transport, IT, iron and steel. He expects a pick-up in recoveries going forward. The bank's Q3 net interest margin stood at 2.7 percent as compared to 2.6 percent last quarter.
Below is an edited transcript of the interview on CNBC-TV18
Q: Can you take us through why your provisions shot up in the current quarter- was it to do with Kingfisher Airlines or any specific account which went into problems?
A: It is not due to any specific account. We had to classify a few stressed accounts across the board as non-performing assets (NPA) and this entailed an increase in provisioning to make the balance sheet healthy and prevent any reduction in the provision-coverage ratio.
Q: Did the annual financial inspection lead to much higher slippages this time around?
A: No. Normally, the annual financial inspection (AFI) reveals a divergence that needs to be provided for. In the December quarter, we had to provide for all those assets which revealed divergences plus Kingfisher for which, of course, we have provided a big sum over the December and March quarters.
Q: Apart from Kingfisher, which sectors broadly did you have to provide for because provisioning shot up from Rs 150 crore to Rs 450 crore?
A: The increased provisioning was due to any particular sector. Provisioning has been made for sectors where restructuring was in process such as IT, jewellery, transport, rice-mills, exporters, iron and steel.
Q: So it is not just the provisioning and the bottomline that disappointed, even the net interest income (NII) growth was down about 5 percent. By how much do you expect the core NII growth to improve and what were the margins at for the bank this quarter?
A: The NII is surely going to pickup and we are going to recover a majority of the NPAs this time as we have sort of declared a war on NPA. Therefore, going forward the recovery is expected to be good and NII to improve.
Q: Last quarter, your net interest margins were 2.6 percent. What is it this quarter?
A: This quarter the NIM is 2.7.
Set email alert for
ADS BY GOOGLE
video of the day
Positive on PSU banks; NPA cycle may have peaked: Barclays