finance | IST

Expect provision coverage ratio to rise to 60% by FY20, says Karur Vysya Bank

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Karur Vysya Bank reported a rise of 18.7 percent in March quarter net profit but its asset quality deteriorated during the year, with gross non-performing assets hitting 8.79 percent of gross advances as on March 31. PR Seshadri, MD and CEO of Karur Vysya Bank, spoke to CNBC-TV18 about the financial results and shared growth outlook.

Karur Vysya Bank reported a rise of 18.7 percent in March quarter net profit but its asset quality deteriorated during the year, with gross non-performing assets hitting 8.79 percent of gross advances as on March 31.
PR Seshadri, MD and CEO of Karur Vysya Bank, spoke to CNBC-TV18 about the financial results and shared growth outlook.
“Q4 was actually a period of consolidation for us. We have been undergoing a transformation in the bank and we ended our digital transformation during Q4. All our loan products are now effectively digital and paperless. I think during Q4, we have also reached a point where we think that most of our legacy related issues are hopefully behind us. the total net slippage that we had during the quarter, the non-performing assets (NPA) accrual numbers was 394 crore and we made provisions to the extent to Rs 275 crore or thereabouts – credit-related provisions which is about 70-75 percent on the net slippage,” Seshadri said on Thursday.
On the corporate loan book side, Seshadri said, “Most of the slippages are coming from our corporate book. These were identified and signalled earlier. The corporate book now has a special mention account-I (SMA) and SMA-II of roughly about 6 basis points (bps). So we think that the issues with the corporate book are muted at this point in time unless something new comes up. The environment that we are operating in is reasonably difficult and therefore one cannot say with certainty that nothing else will crop up. Having said that the visibility that we have today is that the problems on the corporate side have now muted. On our retail book, we had negative NPA accruals i.e. we had more recoveries than we had further slippages and on our agricultural book as well we didn’t have a problem."
“Net interest margin (NIM) for the quarter went up 28 bps sequentially. In Q4 of last year, we had a one-timer, which was parked at an interest income. Sequentially, quarter-on-quarter (QoQ), from Q3 of this year to Q4, NIM has gone up from 3.6 percent to 3.88 percent. This is the second quarter in a row that we have seen our NIMs rise. We, as a bank, have an asset book of about Rs 50,000 crore. Relative to our size, the income accruals are very strong and we are near the top of the class when it comes to NIMs. So they are holding and growing. So our expectation is that the NIM will continue to grow up,” said Seshadri.
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