With inflation touching nearly 7%, bankers do believe there is some turbulence and a squeeze in margins but despite the shortcomings, they are optimistic of posting decent profits for the current fiscal ending March 31, 2008.
?Our overall performance during the financial year 2007-08 was much on the expected lines,? said TS Narayanasami, chairman and managing director (CMD) of Bank of India. The bank’s credit growth is seen at 27% while the deposit growth was likely to be at 24%, he said. But the year ahead seems to be of uncertainty and rise in interest rates appear inevitable unless inflation levels come down. However, bankers are awaiting some signal from the Reserve Bank of India when it unveils the annual monetary policy review later this month. ??I don’t think interest rates will come down at this juncture,? Narayanasami said.
??But it is too early to comment anything. All depends upon the performance of stock market and the interest rate scenario,? he added.
Talking about the inflation, he said, ?I believe that rather than monetary one, it was the fiscal measures like cutting of duties, improvement of supply side management were the need of the hour to tackle the inflationary pressure. I also think that the inflation was really the matter of concern. The debt market will get harder in this scenario. In fact I feel that the inflation was beyond government’s purview,? said Narayanasami.
?Interest rates are seen upward,? said a senior banker at the country’s largest state-owned bank, State Bank of India. Requesting anonymity, he said that the current slowdown in the economy has hit the bank’s credit growth. ?The credit figure wouldn’t up the third quarter-end growth though but it is seen in the region of 18-20% during 2007-08. However, the deposit growth is more likely to be at 24%,? he said.
Nevertheless the bank is hopeful of improving its proftiability in the new fiscal 2008-09. This is because credit is expected to pick up and the bank is hopeful of a 20-22% growth in loans. The focus on priority sector lending is seen backing up the credit growth rate, he said. According to MD Mallya, CMD, Bank of Maharashtra, ??We are likely to witness a business growth of 24% at Rs 71,500 crore as against the mark of last fiscal. Last year the business of the bank was recorded at Rs 57,000 crore.? Mallya expects credit growth to be at 26% (for fiscal 2007-08) and deposit growth to be at 23%. ??It was all due to our good CASA growth which was at 42%,? said Mallya. The rate is expected to be the same in the new fiscal too, he said. Mallya expects the interest rates to be firm at current levels until the RBI announces the annual monetary policy reviews later in April.
MV Nair, chairman and managing director, Union Bank of India, acknowledged that his bank would not be able to achieve the target it set out for credit growth in fiswcal 2007-08. The bank had projected a credit growth of 23%, but the growth is seen to be around 20%, Nair said.