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Last Updated : May 20, 2016 09:06 PM IST | Source: CNBC-TV18

Will look to trim gross NPAs to 2.5% in FY17: Karnataka Bank

The bank saw a drop in gross NPA levels to 3.44 percent in FY16 from 2.95 percent in year before. This was mainly because of the bank's limited exposure to steel companies and large corporates, says Managing Director P Jayarama Bhat.

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In times of rising bad assets and a declining economy, Karnataka Bank's Managing Director P Jayarama Bhat has given a guidance of gross non-performing asset levels of 2.5 percent in FY17 with net NPA of 1.5 percent.

The bank saw a drop in gross NPA levels to 3.44 percent in FY16 from 2.95 percent in year before. This was mainly because of bank's limited exposure to steel companies and large corporates.

Bhat expects a loan growth of 16 to 17 percent in FY17. 

Below is the verbatim transcript of P Jayarama Bhat’s interview with CNBC-TV18's Latha Venkatesh and Reema Tendulkar.

Latha: Your net profit number is now hitting Rs 107 versus Rs 134 a year ago. Can you tell us what you did by way of net interest income (NII)?

A: Our net profit number is Rs 106.79 crore as against the sequential quarter of Rs 96.91 crore. NII has gone up by 23.48 percent quarter-on-quarter (Q-o-Q). Last year's last quarter it was Rs 291.32 crore and now it is Rs 359.73 crore, a jump of 23.48 percent and year-on-year (Y-o-Y) it was 11.47 percent increase.

Latha: We want to know your gross non-performing asset (GNPA) numbers because it looks very good for the first time in many quarters we were seeing somebody posting lower non-performing assets (NPAs) at 3.4 percent compared to 3.5 percent gross non-performing loans (NPLs) is what 2.5?

A: Yes.

Latha: Can you tell us the aggregate numbers please?

A: Aggregate NPA number is Rs 1,180.40 crore as against December figure of Rs 1,186.55 crore. So, percent wise it has come down to 3.56 percent to 3.44 percent and net NPA coming down from 2.41 to 2.35 percent.

Latha: Can you tell us what were the additional slippages. Your overall GNPA has gone down by Rs 7 crore. But what were the fresh slippages in the fourth quarter?

A: Fourth quarter the fresh slippages were around Rs 330 crore and equal recovery was also there to the extent of Rs 337 crore and net addition was minus Rs 6 crore.

Reema: Could you tell us what your current watch list is, what would be your total quantum of loans in SMA-2, can you give us that number?

A: Yes, SMA-2 the total portfolio is around Rs 1,600 crore. It forms about five percent of our gross bank credit.

Reema: If you could help us with what your restructured assets currently stand at?

A: Our restructured assets stands at Rs 1,807 crore and last it was around Rs 2,300 crore.

Latha: What I wanted to know is the Rs 1,600 crore that you say is an SMA-2 habitually how many of them usually pay up on the 70th day or 80th day?

A: Yes, it is almost 50 percent and as of now out of that Rs 1,600 crore about Rs 400 crore already has been in the regular status and we have been continuously following it up.

Latha: What do you expect you could generate by way of slippages in FY17 you think?

A: FY17 as we have targeted a GNPA level of around 2.5 percent and net NPA level of around 1.5 percent.

Latha: You are posting lower gross non-performing loan (GNPL) and you are saying with confidence of FY17. Why is that, you don't have any exposure to the steel guys, to SME guys like the other banks?

A: No, we don't have much exposure to steel guys. This quarter we had done a good recovery and we don't have much exposure in corporates and going forward it will be a sweet year for us.

Latha: What kind of loan growth?

A: Loan growth we are targeting around 16-17 percent.
First Published on May 20, 2016 03:58 pm