Loan book increased 10 per cent to Rs 2.21 lakh crore in September 2021 including a 7 per cent growth in corporate loans as the bank completed a restructuring in its business to move away from high-risk loans.
Kathpalia said the bank is confident of growing its loan book by 14 per cent to 16 per cent this fiscal led by its core loans namely, vehicle finance, microfinance and diamond finance business.
“This is the strongest growth we have seen in my 16-month tenure and we expect the momentum to continue. Corporate loans have also grown after shrinking so far and we expect to achieve our targeted 16 per cent to 18 per cent growth in our current fifth planning cycle and a 14 per cent to 16 per cent growth in the current fiscal year,” Kathpalia said.
The loan growth resulted in higher interest income as a result of which net interest income (NII) increased 12 per cent to Rs 3,658 crores from Rs3,278 crores a year ago.
Profitability was not impacted despite a fall in net interest margin (NIM) to 4.07 per cent in the quarter ended September 2021 from 4.16 per cent a year ago mainly due to surplus liquidity placed under repo with the Reserve Bank of India (RBI).
Other income also increased 18 per cent to Rs 1,838 crores for the quarter ended September 30, 2021 as against Rs 1,554 crores for the corresponding quarter of the previous year led by a 42 per cent rise in fee income to Rs 1,506 crores as against Rs 1,061 a year ago.
Provisions dropped 13 per cent Rs 1703 crore from Rs 1964 crore a year earlier and also lower than Rs 1844 crore reported in the quarter ended June.
Gross NPA ratio declined to 2.77 per cent from 2.88 per cent in the quarter ended June 2021 though it was still higher than 2.21 per cent reported a year earlier.
Kathpalia is confident of keeping the bank’s credit costs to within 250 basis points of its loan book despite it already at 160 basis points of loans which is the lower end of the credit cost guidance the bank had given at the start of the fiscal. One basis point is 0.01 percentage point.
He acknowledged the rising stress in vehicle loans especially the bus segment. Out of the gross slippages of Rs 2650 crore during the quarter Rs 1070 crore was from the vehicle loan portfolio. Slippages net of recoveries and upgrades were at Rs 1192 crore.
