Eyeing 13% credit growth; 150 new branches: Indian Bank

Indian Bank expects its loan book to grow 7-9 percent this quarter and around  13 percent for the whole year, says M K Jain, MD and CEO of Indian Bank.The bank's net profit for the quarter grew 4 percent and Jain attributed the subdued growth to a declien in the value of its bond portfolio."We had to provide depreciation on the investment book because of spike in the yield curve due to Greece problem which was Rs 138 crore," he says in an interview to CNBC-TV18."If I normalise this Rs 138 crore then actual net profit growth is around 70 percent," he says.For this quarter, the bank’s slippages were Rs 496 crore and the recovered amount was around Rs 135 crore, he says.Jain says the bank plans to set up 150 additional branches in north and west India this fiscal.Below is the edited transcript of MK Jain’s interview with Jude Sannith on CNBC-TV18.Q: Summarise the quarter it has been and new landmakrs in terms of business growth.A: The banks business growth crossed Rs three lakh crore of business which is a landmark. The total growth was 10.1 percent but the starting feature was that our CASA growth was 15.51 percent out of that saving deposit growth was 16 percent so that is one thing. Another thing that we shared the bulk deposit to the extent of Rs 2,600 crore during this quarter and last financial year Rs 8,800 crore. As far as operating profit is concerned our operating profit grew by 11.25 percent and net profit grew by 4 percent on year-on-year (YoY) basis. The reason for net profit growth at 4 percent was we have to provide depreciation on my investment book because of spike in the yield curve due to Greece problem which was Rs 138 crore. If I normalise this Rs 138 crore then actual net profit growth is around 70 percent. The asset quality, the total slippages was Rs 496 crore during this quarter. The accretion in gross non-performing assets (NPA) quarter to quarter (QoQ) was Rs 145 crore which is one among the lowest in last 12 quarters.The recovery was to the extent of recovery and up-gradation was to the extent of Rs 185 crore which is again on the line of our expectation. Gross NPA ratio is 4.65 and net NPA percentage ratio is 2.62. Sequentially it is high because of denominator factor and not because of numerator factor. Whereas, provision coverage ratio is 60.92 which has been improved from 60.08. As far as capital adequacy ratio is concerned our capital adequacy ratio is 12.12 percent with a tier I ratio of 10 percent which is one of the best in the industry.Q: Are you looking any restructuring pipeline as far as slippages are concerned that you might consider?A: Restructuring pipeline I am expecting around Rs 1,000 crore but that Rs 1,000 crore restructuring will not qualify under the regulatory circular which they have withdrawn from April 1st 2015 so those will be standard restructure.Q: What is your credit growth been like for this quarter?A: Credit growth for entire financial year we are expecting around 12-13 percent for the full year. For this quarter also YoY we will be able to increase from present 7 percent to around 10 percent.Q: Going forward what is your net interest margins (NIMs) outlook, if you could throw some light on that?A: presently our NIM is 2.36 and I feel that we will be able to retain NIM around 2.3-2.35.Q: What are your expectations going ahead in the new quarter, anything that you would like to look forward to? A: Our expectation as far as total business is concerned it may be around 14-15 percent growth because consistently we are not growing very aggressively. On the credit side as I told may be around 12-13 percent. Gross NPA and net NPA we may try to contain at 4.2-5 percent gross NPA; net NPA may be 2.30 percent. Our profitability will be consistent what we have shown in the last previous quarters and the same consistency will be there in the profitability. Return on assets (RoA) also we will be able to retain the RoA what it was in the last financial year. Q: You also got some plans in terms of launching a 150 new bank branches in an around the city and country could you take me through those plans? A: We have planned to increase our branch network by 150 branches in this financial year. Last year also we opened 158 branches and 250 ATMs. This network we are focusing in those pockets where we are having lesser presence in the central part of the country and western part and the northern part apart from our increase in the branches in the southern part. So, that is what we are focusing and we will be complying with regulatory guidelines with regard to reaching out to unbanked areas.