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The bank, which was facing the heat of ownership battle is also confident that it would resolve the issue soon, which will pave way to hold AGM, where it can get nod of the shareholders for its proposed IPO.
In an interview to T E Narasimhan at the Bank's head quarters at Thoothukudi, bank's MD and CEO H S Upendra Kamath, who joined the bank last year from Vijaya Bank, said that the ultimate aim is to list the bank.
Bank's net profit in 2014-15 was Rs 379.40 crore as compared to the net profit of Rs 300.77 crore in 2013-14, up by 26.14%. What are the key factors for the bank's performance?
Overall interest income, both interest income on advances and treasury, of the Bank has gone up. The non-interest income of the Bank increased from Rs 221 crore to Rs 292 crore and the share of NII to total income has gone to 9.33% from 7.53% in 2013-14. Total interest income of the Bank rose by 4.92% to Rs 2,835.53 crore in 2014-15 from Rs 2,702.65 crore.
Because in the reduction of NPA overall provision requirement has come down to Rs 18 crore in 2014-15 from Rs 139 crore in 2013-14. it has come down by 87% year on year. Provision of restructured assets have gone up, tax provisioning has gone up, trading income in treasury has gone. these are some of the reasons.
Will you be able to sustain this?
It will depend on the credit growth which we can achieve. Last year we had peculair problem, which is jewel loan coming down by Rs 1,000 crore and the overall advances going up by Rs 2,300 crore. Had the jewel remained it was, the overall credit growth of the Bank would have been Rs 3,000 crore plus.
We started growing credit only in the second half of the previous year. This year we hope that we will grow consistently quarter on quarter. First quarter the growth will be limited, but from the second quarter we could grow, this will decide top line.
What is the target for the 2015-16?
We have fixed overall business of Rs 55,000 crore, including deposit Rs 30,600 crore and advance of Rs 24,400 crore. While it might appear too stretched, which works out to 21-22% growth. if we are able to 17-18% growth sustaining current profit level is possible.
Focus will be MSME, retail, agriculture and traders. These were the mainstay of the bank and they will likely to get us the growth.
Does the bank got enough capital to achieve the growth?
CAR, under Basel-III was 13.89%, is well above the RBI norm. With the existing capital we could manage the 17-18% for three years. But have set a target of over 20%, from 2018-19 onwards we required capital.
What are the options the Bank has, considering it cannot tap any other modes due to shareholding issues?
Retaining profit is only source for now. Hopefully if we are able to resolve the issues which is holding back the conduct of AGM in the near future, we should be able to come to the market on tier-II bonds, we should also be prepare the organisation eventual IPO.
What is the capital requirement of the bank?
Around Rs 80 crore in 2018-19 additional capital is required, again depending on the loan book growth, dividend level and a host of factors.
How did you manage to control the NPA?
Following up individual accounts, one time settlement route, sale of underlying assets in addition to upgrading assets. intensified monitoring to contain slippages. Systematic follow-ups. Not sold any of the NPAs to ARCs since they are asset backed. We may do a better job by recovering our self, rather than selling to ARC.
Our target is to contain the slippages ultimately 1% of the opening stock of advances. This year it was slightly higher, but recovery also much above. Compared to 2013-14 gross slippage has come down to Rs 463.69 crore from Rs 684.29 crore.
