Expect loan growth of around 20% by March: Dena bank

Dena Bank reported a net profit of 10.55 percent year-on-year to Rs 206.4 crore in the third quarter of financial year 2012-13 with a rise in net interest income (NII) by 13.6 percent to Rs 615 crore from Rs 541.2 crore during the same period. "We have total restructured book of Rs 4,800 crore out of which Rs 2,036 crore is of state electricity boards, which is government guaranteed, so, 43 percent of our portfolio is government guaranteed," said Ashwani Kumar, CMD, Dena Bank in an interview to CNBC-TV18.

Kumar further added that a total restructuring pipeline of Rs 170-200 crore is expected along with a loan growth of around 20 percent by March. Below is an edited transcript of Ashwani Kumar's interview on CNBC-TV18 Q: How is the asset quality for Dena Bank this time around? How did you do on the slippages as well as the restructured pipeline?
A: Regarding asset quality, though there has been some slippage, yet we have been able to maintain the asset quality and our gross non-performing asset (NPA) stand at 2.09 percent, so a marginal increase from previous quarter figures, but on the whole the asset quality is under control.
In case of restructured book, we have total restructured book of Rs 4,800 crore out of which Rs 2,036 crore is of state electricity boards, which is government guaranteed. So, roughly 43 percent of our portfolio is government guaranteed.
During December quarter, there was a restructuring of Rs 263 crore and very minor slippage of the restructured portfolio about Rs 43 crore that is 0.95 percent. Asset quality wise, we are maintaining a very strict visual on slippages. Accounts are being monitored on a daily basis. Accounts above Rs 10 crore are monitored at the apex level on daily basis, so slippages are under control. Q: What is the exact slippage in Q3 and what would you expect from Q4 and the next quarter? Would they be lower than the slippage, fresh slippage in the Q3?
A: Slippage in December quarter was about Rs 238 crore and we don't have any major account slipping. So slippage should be slightly lesser than what it has been in December.
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Q: Some bankers' day before yesterday at Reserve Bank of India (RBI), said that maybe there could be a second round of micro, small and medium enterprises (MSMEs) who could come up for restructuring. They feared a wave of restructuring requests. Does it square with your experience?
A: We have one major account, which may come out for restructuring in this quarter and otherwise smaller accounts, maybe they are there, but no major account of worry. Q: What is the size of your exposure to this major account?
A: That is about Rs 70 crore. Q: What would your total restructuring pipeline look like because you did Rs 260 crore in terms of fresh restructuring this quarter? What would the pipeline look like beside this Rs 70 crore exposure?
A: Pipeline should be at around Rs 175-200 crore. Q: What about the provision coverage, you said it is 70 percent, is that better or worse than last quarter?
A: No, it is slightly lower than last quarter. Last quarter provision coverage ratio was around 73 and that has come down to 71. Q: What about growth, 14 percent is your NII growth, but year-to-date how many more loans have you lent and by March 31, what might be the loan growth number?
A: No, we are expecting a loan growth of about 20 percent by March, so it is 20-21 percent.

Q: What is the year-to-date figure, the 9-month figure, what is the loan growth figure?
A: Loan growth year-on-year is around 31 percent.
_PAGEBREAK_ Q: What were the margins for this quarter and going forward, what is the trajectory that we expect for Dena Bank?
A: Our net interest margin (NIM) for December 2012 quarter was 2.88 against 3.33 in December 2011 quarter. If you see 9 months, it was 2.92 against 3.16 for December 2011 quarter. We are conscious about the NIM. So, our major thrust is on moblisation of current account and savings account (CASA) deposit for which campaigns are already on and more thrust will be given in the remaining period of this year.
Similarly, our focus is on lending to retail and SME sector in a big way. We have also shed some bulk deposit, which was around 29 percent in December 2011, has come to about 19 percent in December 12. Q: Do you see any significant worsening in terms of asset quality ratios considering that you are monitoring it on a daily basis hence the trends are possibly worsening at this point in time. What kind of guidance can you give us in terms of gross NPAs, net NPAs ratios and absolute levels?
A: Trends are not worsening, but seeing the overall economic scenario it is better we monitor on daily basis. So, it is not a question that trends are worsening therefore we are monitoring on daily basis – it is just because the overall economic situation is such that account should be strictly monitored. Therefore, we are monitoring the accounts. Q: The heavyweight in the industry yesterday, announced a minor base rate cut, but more cuts sector wise, what will you do? Can you use this platform to announce your base rate or any cuts?
A: No, I cannot use this platform for announcing any base rate cuts. Let the Asset and Liability Management Committee (ALCO) meet. ALCO would be meeting very shortly and we will be taking a view. Q: Will it be for base rate or will it be separately for deposits?
A: No, let the ALCO meet, for base rate and for other products we will be taking a view as soon as the ALCO meets.