Andhra Bank declared its quarterly earnings Saturday, saying its profits fell 72 percent on higher provisioning.In an interview with CNBC-TV18, the bank's MD and CEO Suresh N Patel said the bank had fully complied with the Reserve Bank of India's asset quality review guidelines that had called for stricter provisioning of doubtful accounts.But going forward, he said the pain with respect to non-performing assets was not fully over as some "seven-eight accounts with large exposures" continue to remain under stress.At the operating level though, the bank chief said profits held steady. Below is the verbatim transcript of Suresh N Patel's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Latha: You have reported 20 percent rise in your gross non-performing loans (NPLs) quarter-on-quarter (QoQ). How much of the Reserve Bank of India's asset quality review numbers are already factored in, should we see a similar 20 percent jump in FY17 as well?
A: As far as NPLs are concerned, it has taken a rise from 7 percent to 8.39 percent. The provisioning requirement has gone up and that is why profit is only Rs 51 crore because operating profit has helped us; the operating profit growth is 20 percent for the year.
The NPL, as far as your question is concerned, till March '17 cleanup exercise has to be done, so we do not say that next two-three quarters there will be no pain. The only comfort would be that if we are able to increase operating profit to take care of provisions.
Latha: Can you give the numbers. Your gross non-performing assets (GNPA) have gone up from Rs 9,500 to Rs 11,400. How much did the slippages go?
A: The slippages in December quarter was Rs 2,500. In this quarter also it's Rs 2,500. So we have a restructured portfolio of more than Rs 11,000 crore and there are few large accounts which may also slip in the next two quarters.
Sonia: You spoke about Rs 2,500 crore of slippages in this quarter. Can you tell us what the fresh restructuring that you did in Q4 itself compared to last quarter?
A: That was the one major account.
Latha: Strategic debt restructuring (SDR) and 5:25?
A: The total number of SDR that we have done is about 17 accounts.
Latha: How much would the money involved be?
A: The total amount is about Rs 3,000 crore and 5:25 with ten accounts with Rs 2800 crore.
Latha: You said that your asset quality review (AQR) is over with this Rs 2500 crore, right. Whatever you have recognised as of FY16?
A: There are three parts of AQR. One, what needs to be done by March is done. The remaining accounts which are otherwise standard, there is a late fee of 2.5 percent every quarter. Out of those accounts 500 are already declared as NPA, so we have already provided for it. So, remaining accounts are Rs 2,000 crore with 2.5 percent every quarter.
Sonia: Can you give us an expectation in the first half of FY17 from this 8.4 percent gross NPAs, how much do you think it could go to by the end of first half of FY17?
A: The issue is that NPA is increasing because advance is not increasing, so percentage wise it is going up because we have reduced the corporate credit by about 6 percent. However, percentage wise NPAs going to increase; we do not say that it is going to come down.
Latha: You said that there are still some large accounts which could slip. Can you give us a ballpark figure; some of the private banks have given us watch list. ICICI Bank has Rs 52,000 crore and Axis Bank spoke of Rs 22,000 crore. You are also speaking about some list which may go bad. What is that number?
A: There are about seven-eight accounts where the exposures are large, so that's the reason we are saying that in percentage term our NPA may go up.
Latha: What is the amount involved. You said seven or eight big accounts?
A: For last few accounts all these were the major accounts, so it has been around Rs 2,500 crore. So, it could be Rs 500 plus or minus but the range would be anywhere between Rs 2,500 and Rs 3,000 crore.
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