Keeping check on loan book, fresh NPLs: Allahabad Bank

Public sector lender Allahabad Bank is making an effort to curb its non-performing liabilities. In this quarter, the bank managed NPA recovery of Rs 837 crore and reduced fresh addition to Rs 1,694 crore from Rs 2,586 crore, says CMD Shubhalakshmi Panse.

She told CNBC-TV18 that its total restructured book stands now at Rs 13,595 crore against Rs 14,874 crore (March 31, 2013). The bank also has an exposure to Lanco Infratech, which has filed for corporate debt restructuring, she adds. Further, bank’s NII has improved from Rs 1,306 crore to Rs 1,312 crore year-on-year. In the March quarter, NII stood at Rs 1,056 crore. Also Read: Allahabad Bank Q1 net fall 20% on surge of bad loans Below is the verbatim transcript of Shubhalakshmi Panse’s interview on CNBC-TV18 Q: Your non-performing liabilities (NPLs) are extremely disturbing, almost 1 percent higher as a percentage of the total book that is your gross NPLs. Can you take us through what went so terribly wrong, what were the fresh slippages that you created? A: If you look at March 2013 for that quarter we had added Rs 2,814 crore. Against that this quarter we have added Rs 1,694 crore. Of this Rs 1,694 crore, eight are big accounts on which we have added Rs 680 crore. If we remove that this is in line with what otherwise should have been normal. From Rs 2,586 crore we have come down to Rs 1,694 crore and along with this our recovery has been excellent. Our cash recovery has been Rs 107 crore, upgradation Rs 292 crore, recovery in written off account Rs 103 crore and Rs 335 crore of recovery within the quarter which have become NPA. If we take all this into consideration, our total recovery has been to the extent of Rs 837 crore in the quarter. So Rs 837 crore NPA recovery, reduction in fresh addition from Rs 2,586 to Rs 1,694 crore. We are continuously monitoring our loan book and we are trying to ensure that fresh addition is kept to a minimum. I know that the numbers are looking very disturbing because the numbers have ballooned up gross NPA from 3.92 to 4.78 percent and net NPA from 3.19 to 3.87 and the provision coverage ratio from 50 has come down to 48.18 percent. However, we are continuously monitoring and we are sure our recovery performance will keep on improving because June quarter is generally a subdued quarter. In spite of that we have recovered Rs 837 crore of fresh recovery. Q: What is your restructured book picture looking like, how many fresh restructured assets have you created? A: The total restructured book is Rs 13,595 crore, which was earlier Rs 14,874 crore as of March 31, 2013. Fresh addition has been only three accounts total of roughly Rs 60 crore. Q: Do you have exposure to Lanco Infratech and they have filed for corporate debt restructuring (CDR)? A: Yes, we do have and we are waiting for further details because we still do not know as Lanco has quite a few accounts, what exactly they are going to do, they have not come out with. _PAGEBREAK_ Q: That is what the market wants to know because there is standalone debt which is much higher than the consolidated debt and the feeling is that the CDR would be filed on a standalone level, on the parent company level. A: We are also waiting for full details because we have still not got them. So we are not in a position to crystallize what will be the total amount which will come under the restructured portfolio of Lanco. Q: This is the second straight quarter where your net interest income (NII) has been very muted. If I remember correctly last quarter it had gone down. By when can we expect good growth in terms of NII from your bank? A: In fact our NII has improved substantially because NII from Rs 1,306 crore has come to Rs 1,312 crore year-on-year. But if you look at the March quarter, NII was Rs 1,056 crore. In fact for the last three quarters, NII growth was negative. This time we have shown a good growth from Rs 1,056 crore to Rs 1,312 crore, which is a substantial improvement. Q: What is your net interest margin? A: Our net interest margin is 2.83 percent, it was 2.81 percent in March and it was 3.17 percent in June 2012. Q: How do you see the current quarter that is the July-September quarter? Do you see a control over NPLs and restructured book? You have already seen one third of this quarter, any visibility? A: As far as NPA is concerned we are very sure that we will be showing much better performance during this quarter because most of the big accounts we have already added. So this quarter should have a better performance as far as fresh addition is concerned. As far as CDR is concerned our pipeline is to the extent of Rs 1,239 crore, we are still waiting for Lanco. Most of the big companies which have filed for CDR we are there and the pipeline is to the extent of Rs 1,239 crore.