To maintain net interest margin at around 3%: Dena Bank

Dena Bank declared its July-September quarter results. Its net profit grew by 24 percent, year-on-year, to Rs 239.6 crore.

In an interview to CNBC-TV18, Nupur Mitra, chairman and managing director of Dena Bank says Q2 net interest margin (NIM) was at 2.86 percent. "We will be maintaining NIM of around 3 percent," she adds. Below is the edited transcript of her interview with CNBC-TV18’s Gautam Broker and Ekta Batra. Q: Can you just take us through what exactly the net interest margins (NIMs) were for your bank this time around? A: NIM is around 2.98 percent for the half year. Q: What about the quarter? A: For the quarter, it is 2.86 percent. Q: Should I presume that it has come down from 3.06 percent levels that you’ll clocked last quarter? A: Yes. We have reduced the rate of interest in case of SME and agriculture investment credit across the board. In the present economic scenario, we cannot tax SMEs to the extent that they become NPAs. So, our non-performing assets (NPAs) have not increased to a great extent. We have been able to maintain the profitability. The percentage of profit growth has been around 30 percent in case of half year and around 25 percent in case of a quarter. So, we have compromised on NIM to retain our profitability. Q: Do you see further room for more cuts in terms of the rates being offered to SMEs? How much do you think is the headroom? Where do you see your NIMs stabilise? A: SME, at the moment, as far as Dena Bank is concerned, our rates are one of the best in the industry. If the cost of deposit further comes down, which is a very likely scenario, then definitely there will be headroom for cutting the rate of interest. Q: What would your guidance for your NIMs be now? Would you reduce it because your earlier guidance was around 3 percent? A: My guidance remains around 3 percent because 2.98 percent and 3 percent is not that big a difference. We will be maintaining NIM of around 3 percent. We will be maintaining a return on asset of over 1 percent. Q: Gross NPAs haven’t slipped as much. What's the guidance for that? A: I think it will definitely be below 2 percent.