A highly profitable bank, Indian Bank hopes to grow its balance sheet to Rs 5 lakh crore by 2015. TM Bhasin, CMD, tells Geeta Nair that the bank is innovating to attract and retain customers.
How has has the bank managed the turnaround to do consistently well in the last few years
We have seen strong support from the government and the central bank and that helped us out of trouble. Today, our gross NPAs are less than 1.6 % while the net NPAs are 0.5%, which is globally accepted. In June last year, the net NPAs were at 0.8%, so we have clearly recovered. Moreover, were growing profitably with a 12% rise in profits so far this year. We have 85% provisioning.
Are you looking for more support from government
Not really because were ploughing back our profits; this year till date we have achieved Rs 1,275 crore in net profits. Moreover we are adequately capitalised with the Tier I CAR at 9.67%, among the healthiest in the industry. Today, the government holds 80%in the bank and were doing an FPO, issuing 10% equity. There is Rs 6,000 crore headroom available in Tier II capital.
Where do you see Indian Bank in the next few years
We hope to have a balance sheet size of Rs 5 lakh crore by 2015, a net profit of Rs 5,000 crore, 2,500 branches and a 25,000-strong workforce.
We want to increase both fee-based income as also non-interest income. The RBI Governor D Subbarao has said that banks need to reduce interest margins, raise deposit rates and reduce lending rates. The target is to take non-interest income from 11% to 13% of total income by 2012 and to 15% by 2015. We feel this is achievable.
We also want to grow our loan syndication business and since the launch of the loan syndication desk we have cleared 23 proposals in 2010-11 for Rs 26 crore.
We appraise large projects and earn commissions. We are looking more at non- fund-based opportunities since they give us instant income. We also have the insurance tie- up with HDFC Standard Life and last year we did Rs 25 crore commission from premium and are hoping to do Rs 40 crore this year. We are looking to grow the fund management, home loans and merchant banking spaces.
How do you plan to grow the mutual funds and insurance businesses
Currently, we have tie-ups with mutual funds to sell their units but now we want to sell our own funds too. We have received EOI from six domestic and five global players to launch our own MF through more innovations for segments such as post-retirement, education. Since we have 1,850 branches, instead of selling somebody elses products we can sell our own. There will also be a tie-up for life insurance, where no capital will be required but our branch network will come in as our part of the equity and it will be in the name of Indian Bank. There is clearly scope to sell mutual funds.
Is the re-entry into housing finance timed right
Plan a venture when the timing is difficult so that execution will start by the time market becomes alright. Indhousing is currently recovering some dues and around Rs 76 crore is to be recovered. Once were done, we will aggressively fund housing loans.
Its been a tough environment lately
We have grown our loans by 28.4% in the nine months of 2010-11 and deposits are up by 22%. Our CD ratio this year it will be 73%. We have unlocked money from the investment portfolio as yields were low. Our NIM is fairly high at 3.84% because our CASA has gone up to 33%; by March, CASA should be at 33.5% and next year, it should grow to 35%. We are targeting salary accounts in IT firms. Our geographical spread, especially in Tamil Nadu, where we have 770 branches and Andhra Pradesh, 270 branches, will help.