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finance | IST

Expect better treasury earnings in Q2FY20, says Bank of Baroda’s PS Jayakumar

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After the Reserve Bank of India's last monetary policy, Bank of Baroda linked their retail interest rate to repo rate. The bank has introduced a new variant of home loan product which is also linked to the repo rate. PS Jayakumar, MD & CEO of the bank, shared the outlook for FY20.

After the Reserve Bank of India's last monetary policy, Bank of Baroda linked their retail interest rate to repo rate. The bank has introduced a new variant of home loan product which is also linked to the repo rate. PS Jayakumar, MD & CEO of the bank, shared the outlook for FY20.
"Retail portfolio is around 23-24 percent of our total book, but the intention is to move to repo rate for a broader range of products for effective transmission," Jayakumar said on Tuesday.
“At this stage, it’s early to comment upon margin. We expect deposit rates also to come down, in fact, we have already reduced deposit rates by about 25 bps on 1-2 year tenure,” he added.
Talking about CASA, Jayakumar said, “Our CASA ratio consequent to the merger decline from 40 percent to 37 percent and that is because of the 3 banks had a lower CASA ratio. So there has been some downward revision but we are back to putting the right kind of focus through cash management and other programs to rev up the current account and savings account rate back to 41-42 percent level.”
On the margin front, he said, “As long as we can contain the slippages and improve the recovery, the net position doesn’t change materially from where we are, I would think the margins on the balance should increase. So we have to work through that collection numbers.”
About slippages, the MD & CEO said, “Barring 1 or 2 accounts, I do not think there is any real surprise over there, but to a question whether some of these NBFC accounts would be classified as non-performing assets and would that affect the slippage ratio, my sense is that issue probably is going to be avoided for a significant part although some slippages will happen because resolutions may not be in place.”
“However, as far as the 2 large accounts are concerned, let’s talk about DHFL and others, there is a very determined effort on the parts of both the banks and the support of the company to find a resolution in a very early manner,” he added.