Motilal Oswal
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Motilal Oswal
October 12, 2018 04:55 PM | Business

Karnataka Bank aims to reduce gross NPAs to 4%

Karnataka Bank on Friday said it aims to reduce gross NPAs (non-performing assets) to four percent.

In an interview to CNBC-TV18, Mahabaleshwara MS, managing director and chief executive officer, said the slippage is totally under control now, "If you look at the gross NPA, which was at 4.72 percent as of June 2018 and 4.92 percent as of March 2018 is now at 4.66 percent."

"The stress in the pipeline especially my SMA2 (special mention accounts) and MSME dispensation there is considerable reduction. In fact, SMA2, which was at Rs 734 crore during June 2018 is now at Rs 347 crore. Similarly, MSME dispensation, which was at Rs 319 crore about a quarter back is now at Rs 210 crore. So, this is an indication that how much is the level of stress in the pipeline," Mahabaleshwara said.

On IL&FS, he said, "We have exposure to three entities of IL&FS and all put together, our credit exposure is Rs 156 crore, which is around 0.31 percent of our total advances. All the three are standard accounts, only one account with an exposure of Rs 30.79 crore, we have treated it as SMA2."

Mahabaleshwara further added, "Net interest income (NII) moved up by 6.24 percent. The reason being that our yield on advances went up by about 11 basis points and the cost of deposit also went up by about 11 basis points. So, whatever that impact is there, for the entire deposit, it's now absorbed. So, that is the reason we are getting about 6.24 percent increase in the net interest income."

"However, there has been a re-pricing of majority of the advances ranging from about 10 basis point to 70 basis points in the last week of this quarter, which is going to get us a significant improvement in the NII and eventually in NIMs also. We should be able to maintain the NIM at about 3 percent, presently it's at 2.91 percent. So by March 2019, we should be able to get a NIM of around 3 percent," he said.
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