Animesh Chauhan, MD & CEO, OBC talks about the bank’s performance in the third quarter.
Below is the verbatim transcript of Animesh Chauhan's interview with CNBC-TV18's Ekta Batra and Reema Tendulkar.
Ekta: The one thing that has disappointed the street this quarter has been the higher provision that you all have recorded and your gross non-performing asset (NPA) which has jumped over five percent. Can you detail to us what went wrong in terms of asset quality this time, fresh slippages, fresh restructuring this quarter?
A: Restructuring this quarter is around Rs 2,000 crore which is really high and that is basically arising out of three major accounts which have resulted into a restructuring of a little over Rs 1,200 crore and that has made the provisions to be on a very higher side. As for NPA the guidance given by the bank earlier also was also that it will have Rs 1,000 crore slippages. The slippages have been Rs 1,300 crore this time as well. In fact I am more disappointed with the poor progress done by us on upgradations which is only Rs 58 crore in the quarter. We will be focussing for a better improvement on that and we expect it to improve with the economy going up.
Ekta: What happened to your fresh restructuring this quarter then? Can you tell us more about these three major accounts and what is the likelihood of it possibly slipping into slippages in the coming future?
A: These three accounts I don’t expect that they will be slipping. Yes, the slippage in our Rs 1,300 crore of NPAs has been almost more than 50 percent because of the restructured accounts slipping, about Rs 700 crore odd has slipped into NPA this quarter but the accounts that are now restructured are basically under a deep restructuring by consortiums and we do not expect them to slip in near quarters.
Reema: What are the early signs about what the asset quality will look like in the January to March quarter?
A: We expect slippage of around same, Rs 1,000 crore this quarter as well but the restructuring, the rush that has happened because of the forbearance that is going out from April 1, 2015, is expected to continue but yes, it is expected to be a little less than the Rs 2,000 crore that we have done in this quarter.
Reema: But it will still be very high.
A: Yes, we expect this quarter about one or two quarters more it to remain high.
Ekta: So, can we expect your provisions to be above Rs 800 crore in the next quarter as well?
A: No, because what I have told is that this quarter one of the major hits that we have taken on provisioning is the reversal of Rs 137 crore of profits that we booked in June towards the asset sale of technically written off accounts. After discussion with the regulator that money has been reversed. That entire Rs 137 crore has been reversed this quarter. So, that reversal is not going to happen in the next quarter. So, that will improve the total net profit provision because as you will see the operating profits have been showing a steady rise. So, provisioning - it is reduced by these specific provisioning done for the quarter - the net profit position should substantially improve.
Ekta: Your net interest margin (NIMs) this quarter, what were they?
A: It was 2.69.
Ekta: What is your outlook in terms of your NIMs going forward?
A: We expect it to be around 2.70 percent only with interest rates looking down.
Reema: Leave us with some guidance. By March end quarter where do you see your gross non-performing loans (NPL) which was at 5.43 percent this quarter? Will it improve, will it worsen or will it stay the same?
A: I expect it to remain within 5.50 because we expect some credit off take to improve during this quarter. We will see credit off take has been quite poor going through the last nine months when the slippages have been steady. So, we expect some credit improvement also and the upgradations are expected to be better. So, we do not expect this gross NPA numbers to go up from this level, it will be around 5.4 to 5.5 but yes, it is not expected to come down substantially in this quarter.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
