With its larger peers busy in cleaning up their balance sheets, South-based private sector lender Federal Bank is looking at it as an opportunity to grow business and expects 15-20% credit growth in the next financial year.
“At a time when some of the large and medium-sized banks are going through stress, with their focus more around getting their consolidation and act right, it opens up a remarkable space and opportunities for us," Federal Bank managing director and CEO Shyam Srinivasan told PTI.
In a move to clean up bank's books, the Reserve Bank of India (RBI) had asked lenders to identify some large accounts which are under stress, classify them as non-performing assets (NPAs) and make adequate provision for them.
Following this asset quality review, many of the public and private sector banks have reported dip in their profits or losses in the third quarter of 2015-16.
The second largest lender, Bank of Baroda, reported the highest-ever quarterly loss at Rs 3,342 crore for the quarter.
Srinivasan said the bank is looking at an advances growth of 15-20% growth next year.
"We will exit the year (FY16) by 12-13% and between 15-20% in 2016-17," he said.
He said the bank is focusing on its internal capabilities to able to compete strongly in the years to come.
It will also be looking at growing its SME and NRI business, where it already is strong.
"If you look at FY17 and beyond we will leverage the investments we have made in both in the foot prints and capabilities, and take the two core businesses of SME and NRI and step on that," he said.
The bank has 1,250 branches with 660 branches outside its home market- Kerala.
"Out of the 660 branches outside Kerala, around 65% are in semi urban and tier II cities, which I think is the biggest opportunity for mid market and SME clientele. As the big investments starts kicking in the coming years, then there would be a positive impact on both the segments and we are well placed for it," he said.
For the quarter ended December, the bank's profit declined by 39% to Rs 163 crore from Rs 265 crore.
Gross non performing asset of the bank increased to 3.15% from 2.19% while net NPA rose to 1.66% from 0.69%.
Srinivasan said the bank has already addressed all the stressed assets in the December quarter.
"Up to December, whatever was be done we have done. The effect of what we took in December will be there in the current quarter and that we will have to take, but beyond that it is normal course of business," he added.