Expect credit growth of 10% by March-end: Canara Bank

RK Dubey, CMD of Canara Bank said the state-owned bank saw relatively less lending in the third quarter on a year-on-year basis. The bank reported 18.80 percent decline in its net profit at Rs. 710.51 crore for the quarter ended December 31, 2012, on account of higher provisioning for bad loans.

Meanwhile, it made provisioning for bad loans and contingencies for Rs 625.90 crore for the third quarter, up from Rs 484.48 crore in the year-ago period. Also read: Canara Bank Q3 profit drops 19% to Rs 711cr; shares down "We expect credit growth of 10 percent by March-end," he told CNBC-TV18 in an interview. Below is the edited transcript of his interview to CNBC-TV18 Q: What is your NII growth, total loan growth and asset quality? A: We have total business as on December 31 at Rs 5,42,000 crore. Total deposit is at Rs 3,23,000 crore. Net advances is at 2,18,000 crore. Net profit is at Rs 710 crore. There was less growth in nine months period and net profit is Rs 710 crore. NIM is at Rs 2.36 crore. Capital adequacy ratio is quite good at 12.64 and Tier I capital ratio is at 9.7. Q: How was the loan growth, either year to date or year on year? A: Year on year, loan growth was very little. It was less than last year. Retail portfolio and priority sector, both underwent less growth. Q: What was the exact figures of slippages this quarter, restructured assets and the upgradation? A: Slippages during the third quarter have been Rs 1,314 crore. Q: Are those fresh slippages? A: Yes these are fresh slippages during the quarter. As against Rs 1,921 crore last quarter that is September quarter and first quarter Rs 1,497 crore. So, total slippages in three quarters is Rs 4,733 crore. Q: What about restructured assets? A: Restructured assets have been in this quarter. Rs 1,046 crore last year in the same period, this Rs 857 crore. Q: What is the upgradation in recoveries? A: Upgradation has been Rs 761 crore as against Rs 532 crore in the corresponding quarter. Q: Could you also tell us the Q3 Net Interest Margin (NIM)? A: Q3 NIM is 2.36 percent. Q: You said your advances are Rs 2.18 lakh crore. That is a fall from a year ago levels, isn’t it? Year ago you stood at Rs 2.32 lakh crore? A: Yes there is a fall. Q: So you did not do fresh lending just to play safe? A: There was relatively less lending during this quarter or rather nine months and we are refocusing that now. Q: Will the Q4 see more lending from you or will you continue with the cautious policy? A: No, it will improve. Q4 will be improved lending than Q3, both on retail and non-retail. Q: Could you help us with any kind of a loan growth or credit growth that we could expect in Q4 and thereafter in FY14 as well what the bank is working with? A: No, we hope to have more than 10 percent growth YoY in credit by March. Q: Your margins have slipped. Should we expect this pressure to continue? A: Yes, it is likely to improve. Lending was less and on deposit side we had more high-cost deposits. We have reduced high-cost deposits and we are refocusing on the lending therefore we hope our margins will improve in running quarter. Q: So we could see 2.5 percent again or will it be less than that? A: We should be near 2.36-2.5 percent. Q: Could you tell us the restructured pipeline? A: Restructured pipeline is not much. If the economy shows more problems, yes there are some accounts which we are monitoring. If they do not do well there could be some accounts coming. However, most of the restructured accounts have already been taken into account. Even this quarter restructured number and amount as well has gone down. Corresponding year restructured assets were Rs 1,046 crore, it has come down to Rs 857 crore. Q: Any specific sector where the accounts were restructured? A: No it is across-the-board, it is not in any particular sector. Q: Was it largely Small and Medium Enterprise (SME)? A: Yes. In SME there was more slippage in comparison to other sectors. Q: Do you have exposure to any of the State Electricity Boards (SEB)? Have you begun talks in terms of those tripartite advices which the Planning Commission and the government gave with the state government, the consortium of banks and the SEBs? A: No, our work on those tripartite things is going on. I do not find any problem in those discoms account.