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Karnataka Bank: Comfortable with current capital position; hope credit growth in double digits in FY22

Updated : December 16, 2020 12:58:03 IST

Karnataka Bank has no plans of raising capital right now, but will consider at appropriate time, said Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank on Wednesday.

The bank is comfortable with current capital position, he said.

“As of now we are at a comfortable position of 13.08 percent capital adequacy ratio (CAR). Going forward we have also assessed the impact of COVID-19 and to our pleasant surprise there will not be any negative impact. So all along we have been maintaining a CAR varying in between 12-13.33 percent. So considering that, position is comfortable. But at appropriate time all banks are evaluating to take a stand in further strengthening the capital. So, we will also take appropriate stand going forward if required.”

On asset quality, Mahabaleshwara said, “I had estimated about 2-4 percent of my loan book to be converted under the one-time restructuring (OTR) scheme. So this is on the expected lines because we have to identify all those accounts by December 31. That exercise is going on and I am sure that it will be within that range itself.”

Mahabaleshwara does not expect credit growth to be more than 2-4 percent for FY21. However, he said that for FY22, the credit growth could be in double digit.

“The first half year, it was less than 2 percent. In the second quarter we are focusing more on the retail and the mid-corporate where the traction is quite positive. So, on an average, for this entire year my credit growth may not be more than 2-4 percent. Keeping that in mind, there may not be any requirement of additional capital for the current year. Next year, definitely the growth, especially in the credit, it would be in the double digit,” he said.

Mahabaleshwara expects the average net interest margins (NIMs) to be more than 3 percent. Slippage ratio is expected to be at 1-2 percent levels, he said.

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