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Last Updated : Nov 05, 2012 05:52 PM IST | Source: CNBC-TV18

Allahabad Bank eyes to lower gross NPA to 2%: CMD

Shubhalakshmi Panse, CMD, Allahabad Bank, says that the bank aims to bring down its gross NPA to 2 percent by 31st March, 2013.

Shubhalakshmi Panse, CMD, Allahabad Bank, says that the bank aims to bring down its gross NPA to 2 percent by 31st March, 2013.

Below is the edited transcript of her interview to CNBC-TV18.

Q: The concern of asset quality is clearly reflected in the share price at the moment. Was this one account or across the board?

A: Asset quality concern is across the board. Our Annual Financial Inspection (AFI) was completed in the September quarter where we made some observations and took it on board, as a result of which there is a substantial jump in a fresh NPA accretion.

Q: What is your guidance for next two quarters for gross or net NPAs?

A: It will get better because we have taken cognizance of every account that has been identified, we will either go for up gradation or recovery. Our aim is to bring down the gross NPA to 2 percent by 31st March, 2013.

Q: Do you believe that gross NPLs from next quarter onwards will be lower from here?

A: Yes, it will be lower because we have planned a two pronged attack, first to strengthening our entire credit monitoring portfolio. We will ensure that a general manager will be entrusted with a responsibility to monitor credit rating.

From 31st day itself, we will monitor the account that we had identified so that fresh accretions is kept at bear minimum and ensure that the recovery or up gradation takes place.

Q: What is your view on the sharp fall in NIMs?

A: It has been pretty sharp. Year-on-year, the cost of deposit has gone up and there has been reduction in cost of deposits as we have off loaded bulk deposits to the tune of Rs 12,150 crore. Secondly, due to market scenario we have reduced our base rate both has impacted NII. Our credit portfolio has seen an increase of 14 percent, so there is a deep decline in NIM with both combined efforts

Q: What can we expect for provisions; how high could they go?

A: There are three parts to provisions, first, NPA per se, restructured accounts which have been added in this quarter and third is the prudential write off where we made substantial provision. All the three has impacted total provision and coverage ratio. 

Going forward we would like to keep our NPA portfolio bear minimum. We like to ensure that our profit improves after taking steps on credit and deposit portfolio. Once our operating profit improves it improves it will give us room to make more provision which will again substantially improve the provision coverage ratio.

Q: What is your guidance on the net interest margins which has fallen below the 3 percent mark?

A: Our NIM target is around 3 percent till 31 March 2013.

Q: What is the amount of slippages and restructured assets in this quarter?

A: There has been an addition of Rs 1,720 crore as far as restructuring is concerned. Our total restructured portfolio for half year is to the extent of Rs 12,000 crore.

Q: Are more accounts likely to be restructured?

A: Yes, couple of more accounts is likely to be restructured.

Q: Are you a bit optimistic on recovery for next quarter?

A: We are very optimistic because if you take both the last quarter and this quarter we have added more than Rs 2300 crore into fresh NPA and I feel this is an opportunity available to us to concentrate only on this fresh accretion of NPA which either we will upgrade or we will ensure that the recovery comes. So, we are quite gung-ho at Allahabad Bank as far as recovery is concerned.

First Published on Nov 5, 2012 03:47 pm