Expect to keep gross NPAs under control: Corporation Bank

Corporation Bank has declared its first quarter results. The bank’s net profit was at Rs 370.3 crore versus Rs 351.3 crore on year-on-year basis.

In an interview to CNBC-TV18, Ajai Kumar, chairman and managing director of Corporation Bank says, the net interest margin was at 2.29%. "It was slightly lower than the previous one. That was partly because of the slightly higher interest expenses," he adds.

Gross NPAs, he says, have increased a bit because of some few accounts. "Otherwise, we have kept them under control. There were three or four big accounts. Because of them, gross NPLs increased by Rs 415 crore. But we have put in strong recovery up-gradation as well as monitoring systems. I am sure I would be able to keep it under control. There would not be any high increase in times to come," he adds.

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

Q: What your net interest margins (NIMs) were this quarter?

A: The NIM was at 2.29%. It was slightly lower than the previous one. That was partly because of the slightly higher interest expenses. We have also made quite a bit of provisions this year. In the same quarter, last year, we have done about Rs 266 crore to have a better provision coverage ratio.

Q: Do you think your margins will get worse than this level or do you think it will improve from this 2.3% level? How do you think FY13 will end for you?

A: We are trying to have a better sustainable model of business rather than depending on higher cost of deposits and also terminal figures. We are increasing our savings bank current account as well as the retail advances and SME advances in a big way. Most of the strategies are now paying off. Retail credit has shown a growth as much as 33% this quarter YoY. SME also has increased by 24%. All priority sector itself is going about 21-22%.

Q: On a gross as well as net level your NPAs have gone up on both accounts. What the asset quality looks like for you going forward from here?

A: Gross NPAs have increased a bit because of some few accounts. Otherwise, we have kept them under control. There were three or four big accounts. Because of them, gross NPLs increased by Rs 415 crore. But we have put in strong recovery up-gradation as well as monitoring systems. We are proactively approaching those borrowers which are under stress. I am sure I would be able to keep it under control. There would not be any high increase in times to come.

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Q: Which are those three-four accounts where the troubled assets continue? What the restructuring has been like this quarter and in which individual accounts or sectors?

A: The restructuring has been mainly in the public sector. Out of the Rs 1,075 crore of restructuring accounts, which have increased, mostly have been the public sector, electricity distribution companies. As far as the other accounts, which have gone into NPA, there were few accounts which are already showing signs of sickness. We have actually classified them in NPA and provided for them.

Q: Do you have more in the pipeline in the restructured accounts?

A: No, not at the moment. We have done everything, which was actually on the table. We have tried to clean out the balance sheet so that sustained recovery of ours can take place.

Q: What have been your total slippages this quarter?

A: Slippages were around Rs 722 crore. Out of that, we have been able to make a good recovery and up-gradation of about Rs 212 crore.

Q: What about the aviation sector? What kind of restructuring have you done from that particular sector this quarter?

A: This quarter, we have not done any restructuring. That was only in the last quarter, that was Air India.

Q: You said that your NPA troubles maybe over. Where do you think you can see your gross NPA levels? This time you have done 1.7%, but in the next couple of quarters, how much do you think you can recover it to?

A: If you look at my figures, I had envisaged a growth of about 21% in overall business, which includes about 18.5% in deposits and around 24% in advances. I think there is a huge market for Corporation Bank, mostly in the South, but now increasing its presence aggressively in places like Gujarat, Rajasthan, Punjab, Haryana and in states like Orissa, Jharkhand and Uttar Pradesh. So, even retail and SME, I would be able to catch up with my overall target figures.