Bank of India gross slippages down over 60% QoQ to Rs 6,232 cr

Steps taken to clean up the books has led to significant quarter-on-quarter decline in Bank of India’s gross slippages to Rs 6,232 crore from Rs 16,805 crore, said Managing Director & CEO, Melwyn Rego. Recoveries and upgradation for the quarter were Rs 4,237 crore, he added.

Loss posted by the state-run bank narrowed to Rs 740 crore in Q1 compared to roughly Rs 3,500 crore in the fourth quarter of FY16.Standard restructured assets are currently at little under Rs 12,000 crore , Rego said in an interview to CNBC-TV18.

The bank has launched a new initiative for augmentation of current account saving account (CASA) and rebalancing of advances towards retail segment following which share of CASA has improved to roughly 35.33 percent while that of retail business has grown to 48 percent, he said.

The bank’s exposure to power and infrastructure sectors is currently at Rs 45,000 crore, which is lower YoY by Rs 4,000 crore.Below is the verbatim transcript of Melwyn Rego\\'s interview to Latha Venkatesh, Sonia Shenoy & Anuj Singhal on CNBC-TV18.Latha: The gross non-performing assets (GNPA) figure definitely is a morale booster. Your stock is up I think 7 percent at this point in time can you tell us some more detail about the NPAs for instance the slippages?A: After I had taken over in mid August 2015 my colleagues and I have taken steps to clean up the balance sheet and this has shown up in significant increase in NPAs during the September-December 2015 quarter as well as the March 2016 quarter when NPAs were touching Rs 50,000 crore. Now while gross slippages are Rs 6,232 crore in June 2016 quarter the recoveries and upgradations writes off of Rs 4,237 crore. So, the net increase in NPA during quarter one is Rs 1,995 crore. That is net slippage as you said of 4 percent over March 2016..Now I must mention that the net slippages if you look at September 2015 was Rs 2,849 in December it was Rs 6,781 crore and in March it was Rs 13,360 crore. Therefore it is very clear there is a marked deceleration in NPA accretion. Gross NPA 13.07 in March has increased to 13.38 percent in June and net has actually declined marginally of course from 7.79 to 7.78 this year has improved from 51 to 53 percent. Latha: Do you have something like a watch list do you have on your radar some amount that may still slip?A: We have standard restructure assets of little under Rs 12,000 crore. If I add that up with a current gross NPA it comes to about 16 percent. That is comparable to our peers. Latha: What about our loan growth and your net interest margins (NIMs) some colour as well on the quality of the liabilities, how much was low cost how much could you bring down bulk deposits?A: I will just give you that but what the bank has taken on is something which we have christened as Mission Star One and this involves of course NPA management which we spoke about, an augmentation of current account and saving account (CASA) and rebalancing of the advances in favour of retail products. Now when you look at CASA it has improved from 31.67 percent in June 2015 to 35.33 percent in June 2016. The share of term deposits of Rs 1 crore and less has grown by 10 percent year-on-year (YoY) and now constitutes 72.3 percent of total term deposits as compared to 66 percent in June 2015. Now this is part of reduction in the concentration risk. When you come to rebalancing of the advances portfolio the share of the retail portfolio has grown from 44 percent in June last year to 48 percent in June this year. So, correspondingly corporate advances has reduced from 56 percent to 52 percent.Latha: Give us a bit of break up industry wise of your corporate advances especially those to the power and infrastructure space?A: Power and infra is roughly about Rs 45,000 crore and that is in fact not very significant. Latha: How does it compare with quarter ago or year ago?A: A year ago we have brought it down by about Rs 4,000 crore. Coming to the NIMs which you were mentioning see despite the stress on asset quality, the domestic NIM during quarter one has improved to 2.54 percent from 2.43 percent in March. NIM for overseas operations has also improved to 1.42 as compared to 1.24 in March 2016. If you look at it on global basis again it has improved to 2.20 from 2.06 quarter-on-quarter (QoQ).Latha: You said your standard restructured is a little under Rs 12,000 crore, if you can give me a more exact figure and more importantly how much of that would you really worry may slip? A: The exact numbers is Rs 11,950 crore. Latha: How much would you worry, would 70 percent slip, 80 percent slip, 60 percent slip? A: I do not expect that high a number to slip. In fact looking at a year as a whole, I am looking at our recovery and upgradations of Rs 17,500 and overall slippage I don’t expect that to increase over that. The denominator growth, I am looking at something, a very modest maybe 6-8 percent; it won’t be more than that. However, nevertheless, as compared to past year where we went into absolute consolidation to focus on the cleanup and then we were focusing on CASA build up, rebalancing, so there would be growth. So, when I look at the numerator, it may grow a little but the denominator is definitely going to grow. Latha: Recovery and upgradation you said is Rs 17,500 that is the target for the year?A: Rs 17,500.Latha: That is over and above the Rs 4,500 you have done in this quarter?A: No, this is for the full year. On the standard restructured, Air India is also included. Latha: Any numbers on loan growth, you said that you are not expecting the numerator to grow much but would the loan book grow by say 5 percent or would it still contract this year?A: I mentioned that it will be in the range of about 6 percent.