Expect asset quality to improve in FY16: Canara Bank

These were largely unexpected quarters we have been able to see. But over a period of time, we feel that with the economy improving, particularly in terms of infrastructure and power sector with coal linkages and gas pooling, we are going to improve this number. Nevertheless, we have been able to contain at 3.89 percent with of course, compared to the last year, there is an increase in non-performing assets (NPA) level.

Anuj: Are you saying that it was a bit of a non-off and in the next quarter or the next two quarters; would you be able to bring it down from 3.89 percent to a mark towards 3.6-3.5 percent? Is that a possibility in the current financial year?

A: We are sure that we will be able to improve asset quality, as far as current financial year is concerned. I personally feel that we have bottomed out, so far as this high value NPA is concerned. And more particularly, the kind of little amount of stress which we have seen, particularly in infrastructure, we do not think that is going to happen in coming quarter with this number. The asset quality deterioration in terms of volume in the last quarter has gone more, particularly with high value NPA.

Anuj: In last quarter, your net interest income (NII) also did not grow much. What kind of growth do you think you will be able to deliver in the next financial year and what kind of net interest margins (NIM) do you think you can enjoy?

A: NIM, at the moment, globally, is 2.25 percent and particularly for domestic operations, is 2.36 percent. I am sure that if we are able to capture the pace of total credit growth, which is growing by the country’s economic growth of 7.6 or 7.9 percent, if I am going to match my credit growth by 15 percent, we are going to improve that.

We have put in place all the systems for going little amount of improvement in corporate growth which during the year we did not see. There has not been much demand as well and I personally feel that there have not been many projects coming up as well. This year we are going to keep a moderate growth of 14 percent in terms of corporate lending as well.

And in retail space, we have been able to grow 21 percent under private sector lending; 21 percent was also agriculture lending and medium to small business (MSMB) lending as well. Under retail, we have been able to grow 26 percent. If I am able to improve my corporate loan portfolio, I am for sure that this net interest margin and also the income are going to improve correspondingly.

Sonia: We hope that the situation improves from here on, but if you can just give us some more numbers. Last quarter, your fresh restructuring was around 1,030 crore. What is the fresh restructuring the bank has had to make in this quarter, in Q4?

A: There was restructuring in the last quarter; it has gone a little up mainly because the window of restructuring is likely to be closed. From April 1, we are going to make restructuring a part of NPA. If that will be the case, there has to be a little amount of pressure for restructuring the last quarter.

There has been a few accounts under infrastructure that were largely one of the reasons that why the restructuring went up. But if you compare the restructuring that we have done during this year to the last year, this amount was less. This whole aspect is likely to be improved upon. And the figure which has been given to me is that for 2013, the restructuring has gone under infrastructure by 1,532 and under construction with 1,825, iron and steel 68 and under textile 210. So these are the factors, going by the RBI policy announcement, all come under the stress factor. We are likely to get the bottom of these restructuring from our existing portfolio or the loan book which we have on restructuring assets.

Sonia: And what about on the slippages front? Last quarter, your gross slippages were around Rs 2,300 crore. What is it in this quarter?

A: This I said that it was mainly because of some unexpected corner where from the corporate lending space, a few high value accounts.

Sonia: I am aware of that. I want to know the exact figure. I just missed out on that slippages figure, would you have that with you?

A: The total amount of last quarter figure in terms of slippages, during the quarter, the March quarter was Rs 2,804 crore.

Sonia: So, your slippages have gone up compared to what you have seen in Q3.

A: In March ’15, total slippages were Rs 2,804. If you are going to see the corresponding period, right from June, September, December, we were somewhere to the range of the same amount. The slippages have gone up. But also at the same time, our cash recovery has been Rs 5,900 crore. So, the resultant effect is not going to be that much to the amount of slippages which I have posted.