The double-digit inflation resulting in high interest rates is likely to hit the performance of the banks during the first quarter. The bankers have hinted that their first quarter, which closed on Monday, results might have some impact. It is more due to depreciation in their treasury portfolio during the quarter as a result of bond yields touching the highest mark in seven years. Still, the bankers are of the firm belief that they will be able to protect their margins by taking various measures during the second quarter which began on Tuesday. It was the State Bank of India?s chairman OP Bhatt who had reveal recently that his bank has set aside at least Rs 1,000 crore as provisioning for depreciation against the treasury portfolio.
Most of the bankers FE talked to expressed their inability in revealing the figures on the plea that theirs was a listed institution which can?t divulge information before their first quarter?s results are out. All the banks will be declaring their Q1 results later this month. Talking to FE, the Bank of India CMD, TS Narayanasami, said that his bank was working on how much amount to keep aside to provide for depreciation in its treasury portfolios thanks to rise in interest rate.
MD Mallya, chairman and managing director of Bank of Baroda, agreed to the fact that there will be some impact of inflation on his bank?s performance in Q1, but he didn?t comment on the quantum of impact. Asked to comment on the depreciation in treasury portfolio of his bank, Mallya said that it all depended on the type of securities a particular bank was holding and in what number.
MV Nair, chairman and managing director of the state-run Union Bank of India, said that ?Yes, there may be some pressure on the operating profit of my bank during the first quarter due to some pressure on net interest margin (NIM)?. Still, we will try to maintain our NIM at 2.80%, said Nair. Though the bank has got a headroom for raising money to the tune of Rs 3600 crore, but it was not thinking of going for rights issue, as already been indicated by it in past, due to turbulent market conditions.