Net profit fell 15% to Rs 720 crore in the quarter ended June 2021 from Rs 844 crore a year earlier as the bank’s loan portfolio fell 0.18% to Rs 4.14 lakh crore. Moderate loan growth impacted both net interest margin (NIM) and net interest income (NII) as the growth of deposits at 5% outpaced credit growth.
NIM or the difference between the yield on loans and that paid on deposits fell to 2.16 percent from 2.48 percent a year ago as the yield on advances fell 88 basis points on a year. One basis point is equal to 0.01 percentage point.
The NII fell 10 percent also due to weak growth in the bank’s lending, mainly because business lending remained stagnant while lending to the retail, agricultural, and micro and small SME (RAM) segments. increased by 11 percent.
CEO AK Das said the bank was hoping for 6-7% growth in this fiscal year thanks to 14% growth in RAM loans.
âWe have already lost Rs 16,000 crore in bulk deposits during the quarter. As the re-pricing of these deposits and loan growth accelerates, we expect to do better. We expect our NIM to increase to 2.50% this year, âDas said.
High provisions and operating expenses also weighed on profits. NPA provisions rose 14% to Rs 873 crore from Rs 767 crore a year ago. Operating expenses rose 16% to Rs 2,715 crore as the bank provided salaries and also set aside Rs 20 lakh for each employee who died from the Covid 19 virus.
Das, however, maintained that the bank will meet its target of 12% gross NPA by year-end, from the 13.51% reported at the end of June.
Slippages of Rs 3,942 crore during the quarter included Rs 1,600 crore from MSMEs which were hit hard due to the disruption in demand and supply due to the pandemic.
Executive Director PR Rajagopal said MSMEs had suffered the most damage, but things would improve by the end of 2021.
âMSMEs suffered the most damage. According to the CII-MSME survey, around 35% closed because they could not continue the activity. But as the economy opens up, we expect to things to improve by the December quarter, “he said. noted.
The bank has restructured loans outstanding of Rs 5,963 crore under the first RBI window and has so far restructured loans of Rs 5,299 crore under the second window which ends in late September.
A rise in other income helped the bank in the quarter. Other income increased 39% to Rs 2,377 crore mainly due to a recovery of Rs 406 crore from a written off aviation account and also increased income generated from foreign currency .