Will be able to maintain NPAs around 0.4%: GRUH Finance

GRUH Finance hopes to maintain its non-performing assets (NPAs) at the current levels of around 0.4 percent, says MD Sudhin Choksey. According to him, the asset quality continues to be as good as what it has been in the past. “Our gross NPAs are at 0.4 percent and net NPAs are nil,” he says in an interview to CNBC-TV18.

The company posted a net interest income of Rs 125 crore for the first half of FY14. Also, the net interest margins ratio of the company is around 4.14 percent, marginal reduction from the FY13 NIM of 4.38 percent. Below is the verbatim transcript of Sudhin Choksey’s interview on CNBC-TV18 Q: We have still not got your numbers so could you tell us what is the total income, the net interest income as well as the profits for the quarter?
A: Net interest income for first half is in the vicinity of around Rs 125 crore. I don't have the Q2 figures. Growth is around 27 percent over the corresponding period of the previous year and profit after tax (PAT) is at the level of around Rs 68 crore which gives you a growth of around 26 percent. Q: We have your Q1 net interest income (NII) so your Q2 NII would be Rs 58 crore which would be flat year-on-year. In Q1 you had good growth but will Q2 be relatively muted then?
A: Yes. Second quarter was very bad in terms of the cost of funds. Post July 17-18, the way the interest rates went up all the lenders refinancing rates were increased and that has adversely affected the NII during Q2. Q: You have some spillover effect of that in Q3 as well?
A: Yes it might be for a month or two months until the lender starts reducing their base lending rates (BLRs) or they start using the rates on the incremental funding and so, even Q3 could be on the flatter side. Q: What does the asset quality looks like, your gross non-performing assets (NPA) as well as your net NPA figures?
A: The asset quality continues to be as good as what it has been in the past. Our gross NPAs are at 0.4 percent and net NPAs are nil. Q: At the end of Q1 the gross NPA was 0.46 percent so that has fallen sequentially from 0.46 to 0.4 percent?
A: Right. Q: Do you think you will maintain it at 0.4 percent or may do even better?
A: Even during last year as on March, we had a gross NPA at 0.32 percent and so we should be able to maintain quality of assets at these levels. Q: What does the net interest margins stand at because there have been some cost pressures?
A: NIM ratio is around 4.14 percent so it has come down from the FY13 NIM of 4.38 percent, there is a marginal reduction.