Highlights

The bank has witnessed a good quarter given all challenges. Asset quality has improved with the decline in fresh slippages of loans and healthy recoveries and upgradations rising above fresh slippages of loan in Q2FY2022.

The bank has also exhibited sharp decline in credit cost in Q2FY2022.

Net interest income has increased to all time high and the core fee income is showing strong traction in Q2FY2022.

The Casa deposits ratio of the bank has improved substantially to 36.8% end September 2021 and the bank has a strong liability franchise.

The credit growth has picked up in many areas and there is a strong traction going into H2FY2022.

The return on assets stood at 0.92% and the bank is well on track to achieve 1% ROA and improve it further northward to 1.25% in next 2 years.

The operating expenses of the bank have increased sharply on account of higher pension expenses, expenses related family pension, increase in annuity cost and hike in dearest allowances.

The fresh restructuring of loans stood at Rs 1000 crore in the quarter ended September 2021. The overall restructured loan book has increased to Rs 3553 crore end September 2021.

Bank has created adequate provisions on restructured loan book and aims to keep provisions on respected loans above 65% ahead.

The bank expect the net interest margin to be in the range of 3.2% to 3.25% supported by lower slippages of loans.

The bank has substantially improved its market share in remittances business to 20% from 6% over last 6 to 8 years with better offerings, robust technology platforms and partnerships. The bank aims to maintain its remittances market share above 20% going forward.

The yield on commercial banking loan stands at around 9% and business banking at 9.5-10%.

The bank is consistently maintaining LCR above 200%.

On the credit card business front, the bank aims to add 12 to 15 lakh credit card in next 2 years.

The bank has built commercial vehicle loan book of Rs 1000 crore, while the bank expects to raise it to Rs 5000-6000 crore in next 2 years.

The commercial and business banking loan book stands at Rs 26000 crore, while the bank expects to raise it to Rs 40-45 thousand crore in next two years.

The bank is keeping close eye on inorganic growth in the microfinance sector.

Fintech partners contributed 3 lakh new accounts in the quarter ended September 2021. The bank has ramped up the pace of new account additions from 3500 accounts per day to 7000 accounts per day.

There are some accounting changes during the quarter ended September 2021. RBI has directed banks to net off recoveries in written off accounts against provisions for NPA instead of recognizing in the other income. Also the provisions for standard investments which earlier formed part of provisions are now to be netted off against other income.

With the change in accounting norms there is increase in cost to Income ratio. Under new scenario, the bank aims to reduce cost to Income ratio to 52% by end March 2022 and aims for further reducing it to 50% in next year.

The bank expect slippages of 25 to 30% in the restructured advance book. The provisions for restructured loan books stands at Rs 450 crore end September 2021.

The credit cost is expected to be at 70-80 bps for FY2022.

The bank expect fresh slippages of loans at Rs 1800-2000 crore for FY2022.