DCB expects NPAs to halve by FY12

Private sector lender Development Credit Bank (DCB) reported a net profit of  Rs 11.3 crore compared with a net loss of Rs 8 crore (YoY). It's net interest income (NII) stood at Rs 50 crore vs Rs 43 crore (YoY).

In an interview with CNBC-TV18, Murali M Natrajan, MD & CEO of DCB highlighted that it's net non-performing assets (NPAs) are below 1%. He said that the bank has provided 100% of the NPAs on unsecured personal loans. So, the NPAs are expected to halve by the end of this year. Below is the verbatim transcript of Natrajan's interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video. Q: Can you talk about the kind of correction that you have managed to instill on your NPA side? Where do you see NPAs coming down to in FY12? A: The NPAs are at 5.86% down from 8.69% last year, this is on gross NPA, net NPA we are below 1%, so that's pretty good. The coverage ratio is 87% as against requirement of 70%. So, we are pretty much covered on our gross NPA. Since, we are dealing with retail NPA it takes time to recover these dues especially, the unsecured personal loans. We have provided 100% of the NPAs on unsecured personal loans. So, I expect this number to half by the end of this year. Q: What kind of core growth are you seeing now in terms of net interest income going forward and where would do you think you would be able to hold your NIMs? A: Let me talk about the NIMs first, the cost of funds have been increasing in the last two quarters primarily because of the increase in term deposits. We have managed to kind of hold the NIM by focusing on CASA, which is at 35%. Our intention is to always keep it above 30%. The other aspect of NIM is repricing. We did increase our base rate, but I don