South Indian Bank (SIB) expects its slippages to remain under control, around 10% of the moratorium book, despite the pandemic.
Thomas Joseph K, executive vice president (operations) of SIB, said that the bank does not see any major setback in collection and expects the NPA to be around Rs 1,600 crore for the fiscal as projected earlier.
“For the last four years we have been booking NPAs of Rs 1,600-1,700 crore. This time we don’t have any big corporate accounts in our book. The slippages could occur in the MSME and agri accounts, where the borrowers are active, collateral is good and resolution is higher,” he said.
After the government announced moratorium, 56% of the customers availed the benefits initially, but over the period it declined with only 26% of the customers using the facility by the end of the moratorium period.
SIB expects that collection will be good and increase in the coming quarters.
The Kerala-based lender does not see any headroom for growth in the current situation and expects total business to be flat compared to last year, or in the best-case situation to grow around 3-4%.
SIB had reported an 11% growth in its net profit at Rs 81.65 crore for the first quarter of the current fiscal. For the last fiscal the lender had reported a net profit of Rs 105 crore, lower than Rs 248 crore in the year ago period, after specific provision of Rs 255 crore on valuation of security receipts.
“We have identified areas where we can grow and where we don’t want to. Focussed growth is happening in the gold loan portfolio where we have grown by 56% in the first five months of the fiscal compared to the same period last year.,” Thomas said and added that the bank has been trying to bring down its exposure to the corporate loans in the past few years.
Currently the net interest margin is 2.7% and the bank hopes that it will increase to 3% in the next 18 months.
The bank is also planning to raise equity of Rs 750 crore and additional TIER 1 or Tier 2 capital by way of bonds of Rs 500 crore.
Thomas said that the digital initiatives of the bank helped it during the pandemic with 90% of the banking transactions going online and currently it is around 84-87%.