Expect to see 18-20% credit growth in financial year 2018-2019, says City Union Bank

City Union Bank reported a mixed bag for the third quarter. Loan growth momentum slowed down but earnings came in above estimates.

Sharing his views and outlook, N Kamakodi, MD and CEO of City Union Bank, said, “In the past two-three years, we are able to see decline in the incremental slippages to closing advances which we used to see typically four-five years back between 1.2-1.5 percentage, it almost went up to 2.8 percent way back in 2013-2014. Now it has moderated and we are able to see our slippage ratio coming down to 1.86 to the closing advances for the first three quarters and for this quarter, there is a spike where the slippage ratio is 2.16 percentage but overall, we are able to see improvement. We are able to see both in terms of recovery and liquidation of collaterals and all are getting better and we feel year-end should be better than where we are now."

In terms of net interest margins (NIMs), he said, “It is currently at 4.4 percentage for the quarter. It is almost flat and slightly improved about 5-6 basis points (bps) compared to previous quarter.” One basis point is a hundredth of a percentage point.

“Return on assets (RoA) for the current quarter is 1.68 percentage, which comes in the top bracket of the banking industry as a whole,” said Kamakodi.

On loan growth slowdown, he said, “The 17 percent is what we have been stabilising over the period of last 2-3 quarters. This year, at the beginning, we said we should be closing the year between 18 percent and 20 percent credit growth for financial year 2018-2019, looks like we are almost closer to that and we hope we should be able to touch that 18 percent.”