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| Canara Bank hopes to improve credit growth, NIM next fiscal |
| BS Reporter / Chennai/ Hyderabad Feb 23, 2012, 00:21 IST |
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With early signs of improvement in the market sentiments and talks of a likely cut in the Cash Reserve Ratio (CRR), public sector lender Canara Bank is now hoping to get back to a Credit Deposit Ratio (CDR) of around 72 per cent from the present 69 per cent. This apart, the bank is anticipating a rise in net interest margin (NIM) to 2.9 per cent from the current 2.6 per cent next fiscal.
“In the given conditions, we were deliberately going slow and there was hardly any capex this year. Market sentiment has suddenly improved and logically one or two CRR cuts would come. Credit demand would be much more higher next year,” S Raman, chairman and managing director of Canara Bank, said here on Wednesday.
With sufficient capital, the bank would be in a better position to steer the business to 18-19 per cent in advances in the next financial year from around 16 per cent now, according to him. It had raised Rs 1,993 crore capital last year and was not anticipating any additional requirement for the same in the next couple of years.
The government’s stake in the bank, after raising the capital, has come down to 67.7 per cent from 73 per cent . As the government should hold a minimum 51 per cent stake in a public sector bank, there is a large scope for future capital requirements for its growth compared with other banks, according to him.
Attributing the sudden rise in NPAs (non performing assets) to migration to system generated mode, Raman said the bank was in full control of the credit portfolio including NPAs and had almost zero exposure to MFIs and a very minimal exposure to the aviation sector. “Especially, we have no exposure to the companies that are in the news,” he said referring to Kingfisher Airlines. Stating that there was an improvement even in the restructured credit portfolio, he said the bank would be collecting Rs 3,000 crore from the NPA portfolio this year as compared with Rs 2,000 crore in the previous year.
“Our NPAs are spread out and there is no question of one particular segment adding to NPAs. Our overall asset quality is in a satisfactory condition,” he said responding to a question on agriculture lending. Gross and net NPAs for the current year stand at 1.81 per cent and 1.41 per cent respectively.
The bank was in the process filing application to open three more overseas branches in the US, Frankfurt and Johannesburg, he said. It crossed Rs lakh crore business and a net profit of Rs 4,000 crore last year.
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