12% NII rise sustainable; see NIMs touch 3%: Allahabad Bank

Allahabad Bank reported a 12 percent rise in its net interest income for the quarter ended September at Rs 1,309 crore. Its chairman Shubhalakshmi Panse believes the public sector lender will be able to sustain this double-digit growth in NII as the bank has been performing consistently.

Panse is confident of clocking 18 percent growth rate for the bank's credit portfolio. Also, she is hopeful of touching its net interest margins at 3 percent going ahead.
 
Below is the verbatim transcript of Shubhalakshmi Panse’s interview on CNBC-TV18 Q: Could you take us through some key numbers, fresh slippages in the quarter, what restructured assets were and even the net interest margins?
A: If you look at our quarterly non-performing assets (NPA) performance, total NPA recovery in cash was to the extent of Rs 189 crore. As far as upgradation was concerned, it was to the extent of Rs 388 crore and we have sold of our written assets to ARC to the extent of Rs 732 crore for Rs 350 crore. So, our recovery in written account is to the extent of Rs 468 crore.
Total recovery from this is to the extent of Rs 1,045 crore plus during the quarter, whichever account turned NPA we upgraded, that recovery is to the extent of Rs 1,526 crore. So, total recovery upgradation has been to the extent of Rs 2,572 crore, against this a fresh addition has been to the extent of Rs 1,199 crore only. Q: If you could give us details on some of these individual accounts and what is happening over there for example Orchid Chemicals, Kemrock Industries, Sterling industries, some of the accounts that you had classified as NPAs, what is the latest status on some of these accounts?
A: These accounts still continue to be NPAs, we have not seen much development. In case of a Kemrock we have gone to the courts where we have issued securitisation notice. Sterling group had promised that they will come back to us with a restructured program, we have still not received anything. In Orchid Chemical also nothing much has happened. So, as far as these accounts are concerned we have not seen much movement. Q: You also indicated that you have sourced some loans to the asset reconstruction company and the profits in account of that is about Rs 350 crore. Are you planning to do more of that in the coming two quarters or if you have lined up something like this in the coming quarter?
A: We have not yet decided which are the accounts but we definitely have plans that we would be again going through the ARC route, we will be selling some of those written off accounts depending on what are the underlying securities because we have seen a very positive development during this quarter where Rs 350 crore came into our kitty which has really improved our performance during this quarter. Q: Could you give us the pipeline on what could be sold to ARC, what is under consideration or the quantum of written of loans?
A: No, right now we have not taken a call and once we decide, we will share those numbers. Q: A word on your net interest income. The market this time is positively surprised with double digit percentage growth in NII, is that sustainable going forward?
A: It is sustainable because if you look at our performance as far as NPA management is concerned, as far as credit monitoring is concerned we have been performing consistently and if you look at our fresh additions we have full handle on that.
We have been monitoring our portfolio and don't see big surprises round the corner. We are very sure the way we are growing and we have decided that 18 percent growth rate for the credit portfolio, we are very sure we will be touching our net interest margin (NIM) at 3 percent. Q: What was the NIM this quarter?
A: NIM in this quarter has been 2.75 percent. In March, our NIM had gone down to 2.30 percent and from there we have come up to 2.75 percent. So, we are very sure the efforts which we are making we will be achieving 3 percent by March 2014.