South Indian Bank (SIB) announced a net profit of Rs 6.79 crore in the fourth quarter, against a loss of Rs 143.69 crore in the year-ago period. The asset good quality deteriorated, with the GNPA ratio getting greater at 6.97%. Murali Ramakrishnan, MD & CEO, speaks to Rajesh Ravi about the overall performance of the bank and the effect of the pandemic. Excerpts:
SIB reported a profit in Q4 following a loss of Rs 92 crore in Q3. Was it due to the fact of decrease provisioning ?
At the finish of Q3, the gross NPA (such as the pro forma) was about 7%. And at the finish of the fourth quarter, gross NPA is about 6.9%, as we could make some upgrade. Overall, we have been in a position to lessen the tension book. If you see my guidance at the finish of Q2, I had stated that the total tension book would be Rs 2,600 crore. We ended the last quarter with Rs 2,475 crore. But if you look at the composition, NPA, which I believed will be at Rs 1,400 crore ended up at Rs 2,125 crore. We believed we could restructure Rs 1,200 crore, but we could only restructure Rs 351 crore. Yes, our provisions have been decrease for the fourth quarter.
What is your outlook on slippages this fiscal offered that the second wave is seen sturdy?
It is pretty challenging to predict . If you look at the yearly typical slippage of SIB in the previous handful of years, it is Rs 1,650 crore. Last year, in FY21, the bank had to take an improve of 40% in slippages mostly due to COVID, which on a gross advance of Rs 59,000 crore, led to a slippage ratio of 3.92% for the complete year.
I anticipate that the slippage ratio for FY22 would be 3.3%-3.4%. I consider recovery efforts will be also challenging in the coming year. We are searching at this pretty optimistically, and I think that we will attempt to lessen the slippage. As far as guidance, I would say it will be as negative as last fiscal.
Net interest margin declined year-on-year to 2.61%.
There is a large interest reversal which occurred. As quickly as the portfolio which we have been carrying and accruing earnings became NPA, we had to reverse it. Even following reversal of interest earnings, I could preserve the NIM at 2.61% from 2.67%, a year ago. I could do this due to the fact of re-pricing and due to the fact I could bring down my deposit expense. CASA has enhanced and my deposit expense has come down. Even even though there is a drop in my advances book, nonetheless my NII is maintained due to the fact of the effective way I have raised sources. My deposit expense was 9.59% in Q4FY20, and it came down to 8.76% in Q4 of FY21. Cost of funds was 7.97% in the last quarter of FY20 and it came down 7.12% in the last quarter.
What is your outlook relating to advances as it has declined by 9% y-o-y?
The decline has occurred due to two items. As a tactic, we wanted to lessen the concentration threat in corporate book. Wherever we have taken pretty higher exposure, we have been lowering it. As a outcome, Rs one hundred-crore plus corporate exposure has come down to 5% of the total corporate book. As far as new advances are concerned, we ought to be concerned about the good quality. My tactic is profitability via good quality credit. We strategy to improve the loan book by Rs 10,000 crore in this fiscal.
Gold loan book has elevated 18% y-o-y. How is your slippages in the gold loan portfolio?
We do not have lots of slippages in the gold loan portfolio as we have been pretty consciously working with the LTV. In a handful of instances, we had a higher LTV of 95% and we could auction it and we did not shed any funds. We have a separate vertical for the item and our endeavour will be to do more retail and agri-gold loan. Currently, our portfolio is more of agri and significantly less of retail. This item is pretty fantastic and we want to boost the yield. Our yield for retail is 10.5-11 % and agri is 9%. My total gold book is about Rs 9,000 crore out of a total advance book of Rs 59,000 crore.