RK Dubey, CMD of Canara Bank is hopeful of asset quality of the bank improving in March quarter. In an interview to CNBC-TV18 he said: "The total upgradation and recovery had been of the order of more than Rs 5,000 crore. I hope in the March quarter our asset quality will further scale up and improve."
He is also hopeful of the net interest margins improving in the March quarter to 2.3-2.4 percent from the current 2.2 percent
The Q3 net profit for the bank stood at Rs 409 crore versus Rs 710 crore year-on-year ( Y-o-Y) and the net interest income was at Rs 2227 crore versus Rs 1988 crore Y-o-Y. Provision in the quarter ended December stood at Rs 1,051 crore versus Rs 674 crore quarter-on-quarter and Rs 626 crore Y-o-Y. The provision coverage ratio for the bank is at 57.39 percent as on December 31.
Also read: PNB Q3 net falls 42% to Rs 755 cr but asset quality better
Below is the interview of RK Dubey, CMD of Canara Bank with Ekta Batra and Anuj Singhal on CNBC-TV18.
Anuj: Can you explain this slip in asset quality quarter-on-quarter (Q-o-Q), the gross non-performing assets (NPAs) have gone up?
A: It has not slipped. It is 2.79 percent, there is an improvement. On June it was 2.91 percent, so it has improved even from there. So there could be 10-15 basis points here and there because of one-two account but it is not slippage. Those one-two accounts, which caused this, are likely to be upgraded also and you will see improved result in asset quality also in the March quarter.
We had robust recovery of more than Rs 3,100 crore, a very high amount of upgradation of more than Rs 2,000 crore. The total upgradation and recovery had been of the order of more than Rs 5,000 crore. That has been responsible for this improvement and even now it is going on. I hope in the March quarter our asset quality will further scale up and improve.
Ekta: I just wanted to go through the slippages that you recorded this quarter, what were the fresh slippages as well as the fresh restructuring that you have added this quarter?
A: The restructuring had been Rs 3,454 crore this quarter. Out of which Rs 2,400 crore was for the distribution companies (Discoms) and power sector, Uttar Pradesh (UP), Haryana, Himachal Pradesh, Jaipur and Jodhpur, rest were Rs 1,054 crore.
Ekta: What are the fresh slippages this quarter?
A: Fresh slippages were Rs 2,100 crore.
Ekta: Your asset quality at least in terms of the fresh slippages has worsened on the sequential basis; it has come in at Rs 2,100 crore versus Rs 1,520 crore on a sequential basis, where exactly did this stress come in from this quarter in particular?
A: In June it had gone up to Rs 2,800 crore, in September it improved to Rs 1,500 crore. I told you there are one-two accounts which slipped to non-performing assets (NPAs) which are likely to be upgraded. There are improvement taking place - some amount somebody has to receive, if he doesn’t but if it doesn’t come by cut-off date, then the computer system will recognise it as NPL.
Ekta: What is your pipeline for recast loans at least?
A: The pipeline is around Rs 3,000 crore. We have around 16 accounts, about Rs 3,000 crore out of which around Rs 1,600 crore is for Discomss.
Ekta: Will majority of this show in Q4?
A: Some of the accounts may go, some of the accounts may not go also. It depends because most of them are consortium account but thee Discom accounts of about Rs 1,600 crore may definitely go for restructuring.
Sumaira: What your net interest margins (NIMs) stand at this quarter?
A: We have maintained it at 2.2 percent. Even though we had lowest base rate at 9.95 percent but we have maintained our NIMs and I am hopeful it is likely to improve to 2.3-2.4 by March.
Ekta: Are you consolidating your loan growth simply because of the asset quality situation at this point or are you going to be aggressive?
A: We are quite aggressive in the market but then we are only looking to the area where safety is there.
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