There's no asset-liability mismatch: Corp bank ED

The Mangalore-headquartered public sector lender, Corporation Bank, has posted a 28 per cent rise in its net profit to Rs 333.78 crore during the April-June period this financial year compared to a year earlier. The bank’s net interest income, a major parameter of a bank’s core earnings, also grew 49 per cent to Rs 659.59 crore during the same period.

Against this backdrop, Asit Pal, Executive Director, Corporation Bank, discussed the bank’s future plans with Debasis Mohapatra. Excerpts: After the rate hike by the Reserve Bank of India, many banks are mulling hiking deposit rates. Will Corporation Bank raise its deposit rates in the near future?
We recently increased retail deposit rates for 1,000-day scheme from 7.25 per cent to 7.50 per cent and hiked corporate bulk deposit rates to 7.25-7.5 per cent for three year maturity. We will review our position in the wake up current interest rate regime and take a decision depending on the credit growth in future.

 

Credit growth during June quarter witnessed close to 36 per cent rise as compared to a year earlier. What is your expectation about credit growth in the current fiscal? And Which sectors will drive this credit growth?
Our overall target for advances is around 25 per cent for present fiscal. We have witnessed sound growth in both retail and corporate portfolio in the last quarter and hopeful of maintaining the momentum for rest of the fiscal.

Though the credit growth is sound in the last quarter, your net interest margin (NIM) of 2.62 per cent is slightly lower than many of your peers. How do you see bank’s margin expansion in the rest of this fiscal?
NIM for the bank has witnessed a steady growth in recent time. While NIM stood at 2.26 per cent for the June quarter last year, it was 2.50 in the fourth quarter of FY10. As our loan book is clean with good underlying asset, we hope to attain a NIM of 2.75 per cent by end of this fiscal.

How big is the infrastructure lending in your overall loan portfolio? Is there a concern of asset-liability mismatch due to such exposure?
Our infra lending portfolio stands at Rs 9,600 crore, which is 13-14 per cent of the total loan book. And I don’t think, there will be an asset-liability mismatch in our portfolio as the exposure to infra is not high as compared to our total loan book.

Will there be an increase in interest earnings after implementation of base rate by the bank? And how much the bank is going to pay out towards savings bank account after daily calculation of interest rate?
After the implementation of base rate, we will earn close to Rs 200 crore in the remaining nine months of this fiscal as the loans which were priced around 4.5-5 per cent are now re-priced at 7.75-8 per cent.

In the savings account front, our overall spending will be around Rs 60-70 crore towards savings bank account.