Tamilnad Mercantile Bank (TMB) aims to clock 14% loan growth by the end of the current financial year, led by expansion in its micro, small and medium enterprises (MSME) portfolio, managing director and chief executive officer Salee S. Nair told FE.
“We want to ride on the MSMEs to generate that kind of growth (14%). Next year, we are looking at at least 1% to 2% higher than what we achieve in this current year,” Nair said.
The bank is also targeting a deposit growth of 12–13% and a 12% increase in current and savings account (CASA) deposits by the fiscal year end. As of September, the lender reported loan growth of 10.34% and deposit growth of 12.32%.
On margins, Nair said that if there are no further repo rate cuts, the bank’s net interest margin (NIM) could rise to 3.85–3.90%. “(Deposit repricing) takes about three quarters. So, the benefits from that will be seen in Q3 and Q4, when some of these term deposits that we have on our books get repriced. That’s why it will be upwards of 3.85%,” he added.
Nair noted that while there has been a noticeable uptick in gold loans, the bank plans to moderate this growth. “I take it as a festive-induced consumption pattern. So that would moderate even otherwise,” he said.
Following the Reserve Bank of India’s new gold loan guidelines, the bank has introduced 18 products — primarily aimed at the income-generating segment, with a few catering to consumption needs.
On the expected credit loss (ECL) framework, TMB said it will need to make an additional provision of ₹210 crore. “However, the bank has around ₹250 crores of Covid-related provisions, which will be used for the ECL purpose. This is not part of the provision coverage ratio,” Nair said.
On Monday, the bank reported a net profit of ₹318 crore, up 4.9% year-on-year for the quarter ended September. Net interest income stood at ₹597 crore in Q2, nearly flat compared with ₹596 crore in the same period last year.
On the NSE, shares of Tamilnad Mercantile Bank closed 1.9% higher at ₹466 on Tuesday.