See net interest margin over 3% by Mar '13: Karnataka Bank

In an interview to CNBC-TV18, P Jayarama Bhat, managing director and chief executive officer of Karnataka Bank says, he sees net interest margin (NIM) over 3% by March 2013.

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

Q: Can you take us through your NIM and loan growth?

A: NIM increased from 1.93% to 2.45%. Going forward, we are directing towards over 3% by March 2013.

Q: What did you do in the last quarter of last year, what were your quarter end and year end margins?

A: Last quarter last year was 1.93% and yearend was 2.22%. Now, it is 2.45%, steadily increasing.

Q: Your asset quality has gone up to 3.31% from 3.27%, gross non-performing loans (NPLs). What are the fresh slippages you saw in this quarter?

A: We saw about Rs 40 crore fresh slippages in some sectors like construction sector. Otherwise, there are no fresh accretions. Compared to last year’s gross NPA of 3.68%, we have reduced to 3.31%. There is a U-turn now, recoveries are coming and our total NPA portfolio is under control.

Q: What is the total restructured book now?

A: Restructured book is around Rs 1,450 crore. It forms about 7% of our total advances. Especially this quarter there wasn’t much slippage of restructured portfolio, just about Rs 8 crore book.

Q: What do you expect in the remaining part of the year? What do you expect in terms of loan growth and in terms of NPLs?

A: Loan growth, we are setting a target of 25% this year. In Q1 itself, on quarterly basis, it has increased by 5% and 25% we are giving more thrust to retail book. Return on asset, we were somewhere around 0.73% in last March and it has increased to around 0.9% and we are directing towards 1.1% or1.2%.

As far as NPA slippage is concerned, it is very much under control. We are expecting more recovery. We are trying to reduce gross NPA to around 2.5% or below.

Q: Have you received a lot of suitors wanting to buy your bank or merge with you?

A: Not at all, no suitors.