Bank of Maharashtra managed to keep restructured assets in check at Rs 1300 crore for this financial year till December. However, the bank’s slippages—defaults on restructured loans—rose sharply during the December quarter.
“Slippages in this quarter have been Rs 1,300 crore. However the most difficult part is over,” Sushil Muhnot CMD, Bank Of Maharashtra said in an interview with CNBC-TV18.
“We now see that the slippages which we may have now in the next quarter will be significantly less than this. There will also be more of upgradation which will happen, once cases that have gone to the CDR get cleared,” he said.
Muhnot said the bank was now looking to moderate its pace of growth to near industry standards and focus on profitability.
Also read: Bank of Maharashtra Q3 net profit plummets 92% to Rs 16 cr
Below is the interview of Sushil Muhnot CMD, Bank of Maharashtra with Ekta Batra of CNBC-TV18.
Ekta: We don’t have your numbers which is your net interest income (NII) and profitability as well as your gross non-performing assets (NPA) and net NPA. Can you just take us through all of these details first?
A: The total business has increased year-on-year (YoY) basis by about 18 percent (not sure). So, we have been having overall Rs 2,02,000 crore (not sure) has been there YoY both on the deposit side as well as on the advances side we have had this increase.
The gross NPAs have increased in this period and they are now today 4.01 percent. They are at Rs 3500 crore at 4.01 percent. The net NPA are at Rs 2,200 crore i.e. 2.58 percent. YoY this has been a increase from 1.71 it has gone to 4 percent and from 0.66 to 2.56 percent because of the economic conditions which have been there and also because we have had a very strong growth in the last two years which has now resulted in some increases in the NPA system also.
Ekta: It is quite worrying, you’re gross NPAs which have risen all the way from 2.77 to 4.01; can you just take us through what your fresh slippages were this quarter as well as your fresh restructuring this quarter?
A: The fresh slippages which we have had in this quarter is about Rs 1,100 crore. These slippages have increased in this year. Last quarter it was Rs 1000 crore, this quarter it has been Rs 1,300 crore. Now, we see going forward the slippages are going to come down
Ekta: It was Rs 1,100 crore or Rs 1,300 crore slippages?
A: Slippages in this quarter have been Rs 1,300 crore. It was Rs 1,000 crore in the last quarter; this quarter it has been higher.
Ekta: Restructured assets?
A: The restructured assets are much lower as such. In the whole nine months we have done only Rs 1,300 crore of restructuring. Overall restructured assets are lower.
In fact the restructured assets have ----- (not sure) they have fallen under NPA and maybe once the restructuring happens in the CDR they may get - within the restructured asset they will add up and they will come out from the NPA.
Ekta: Where do you see your gross NPAs going to by next quarter? Do you expect it to worsen significantly beyond this 4.01 percent because you started the year at 1.8 percent gross NPAs?
A: This year we have had lot more of slippages. However the most difficult part is over. We now see that the slippages which we may have now in the next quarter will be significantly less than this. There will also be more of upgradation which will happen because it has gone to the – cases which have gone to the CDR, once they get cleared then more upgradations will happen.
Ekta: Can you just tell us what your advances growth was and where exactly your net interest margins came in at this quarter?
A: My advances growth on a 9 month to 9 month basis has been around 16 percent. The NII has increased by 22 percent from year to year basis – 9 months last year and 9 months this year. However the NIM has come down. The NIM last year was 2.93 it has come down to 2.76 in this 9 months period. In this quarter it has come down a little more, it is 2.58 because of increase in deposit costs as well as reduction in the yield on advances primarily because of the slippages.
Ekta: Bank of Maharashtra has been very aggressive on the advances side. Do you think that it is a prudent strategy for you to be as aggressive going forward because of the asset quality worsening that you are seeing which is so significant on the bank?
A: In a bank you will have timing for every strategy. At that time it was a smaller bank so it wanted to get into the medium bank. So, there was a need for aggressive ramping up of the business which was done at that time by the bank. However after two years of ramping up then you need to have some period of consolidation. Once you have achieved a certain level you need a consolidation, there the impact of the NPA is because of the economic environment not being correct or not being what it is today. So, we are finding that the NPA levels have increased. Now we are looking on a phase wherein we are going to temper the growth to more nearer to industry standards though we are at more than double the industry standards. It will be more tempered towards that while at the same time focusing on increasing the profitability of our business.
Profitability will be increased both from the CASA side as well as from the restructuring of our balance sheet size in terms of SME focus which we will now bring in.
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