Will lower NPLs in FY16: State Bank of Travancore

The net profit for State Bank of Travancore in Q4 stood at Rs 192 crore versus Rs 48.6 crore on year-on-year basis and the net interest income (NII) for Q4 came at Rs 581 crore against Rs 615 crore on year-on-year basis.In an interview to CNBC Jeevandas Narayan, MD of State Bank of Travancore, said that the bank has added around Rs 600 crore to the restructured book.Having tried to maintain a strong grip on asset qualities, the bank has their net interest margins (NIMs) improved to 2.3 percent against 2.1 percent earlier, he said.With slippage difference being around Rs 2-3 crore, the bank's gross slippage is at Rs 800 crore, he added.

Below is edited the transcript of Jeevandas Narayan’s interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy.Latha: Can you tell us exactly why this profit is up? Looks like there has been a tax write in?A: Not really. In fact we did a couple of things to improve the numbers during the quarter as also during the year. In fact even year-on-year (YoY) if you see there is a 10 percent which has come in the net profit numbers. What we did was a bit of cost cutting on the interest expenditure side, very handsome growth of almost 20 percent in the non interest income, as also a bit of rebalancing of the corporate asset portfolio and very strong grip on the quality of assets. All of that and a lot of little steps in various directions at the bank we have been able to do well given the circumstances.Latha: What were the margins, in that case if you could trim interest costs, what were they in Q4, Q3 and for the whole year?A: The exact numbers of course I can make available to you but talking of NIM in fact even though we are not really at that magic number of three but if you see over a period of last three quarters we have been able to improve it from 2.1 to around 2.3 and looking forward what we are looking at is in fact even on the deposit side we have tried to cut our deposit costs and gone in for very robust growth in the current account savings account (CASA) and tried to sort of debulk our deposit portfolio.

All that has helped us and in fact we have been able to get 10 bps advantage on the cost of deposits as also the cost of funds.Sonia: Can you give us some details of what the fresh slippages were that the bank saw this quarter and also what was the restructuring like this quarter?A: Slippages in fact during the quarter if you look at the gross number it is almost around 800 plus but around the same time recoveries as also the upgradation during the quarter have been to the extent of the same numbers and the difference between the two is just around Rs 7-8 crore or so and over the quarters what we have also noticed is that last four quarters the slippages have gradually been coming down.

It started off with around almost Rs 1,400 crore in the first quarter but gradually it has come down and in the last quarter it was around Rs 850 odd crore.Again on the restructuring book as of the year we added around Rs 600 crore interest in restructuring and out of that around Rs 130-140 crore was on the standard asset restructuring and the rest was in the Non Performing Asset (NPA) restructuring. But I believe the restructuring has started tapering off and going forward the positives should come into play in much more intensive manner.Latha: There is a big sale of assets to ARC companies. Do you think you will be able to do that, have your GNPLs come down primarily because of this sale?A: Not really. In fact sale is one of the things we did. In fact I won’t even call it sale, I would say it is an assignment of the assets, but then we have also done pretty well on cash recovery as also on upgradations and in fact assignment if you see this is one of the avenues given to the banks and I do not see anything wrong in it. Going forward maybe because the forbearance is not available now.Latha: Not finding fault, I was just asking therefore will you be able to maintain this downtick in NPLs? It is a very good improvement from some 4.7 to 3.3, the gross NPLs as a percent of total book. How much can it go to in the current quarter or in the current year?A: Quarter I may not be able to really put some numbers on but then during the year we will definitely be able to bring it down further and in fact even if you look at the net NPLs also we are just a tick above two percent and in fact that compared to many others in the market is very good numbers to go with, you will agree with me.But going forward, yes, the challenges are there. We need to replicate and do much more of what we have done in the past as far as the quality of assets are concerned. Recovery on the ground was very good and that is what gives me the confidence that we will definitely even better those records during this year in terms of real cash recoveries.