Highlights:

The financial result of the bank was delayed to June 2020 from normal timing of mid-May on account of COVID-19 pandemic and the statutory auditors had lot of logistic problems especially in Mumbai even though as SEBI had extended the due date up to 30 June 2020.

As per the bank, the entire economic sector and the banking sector is entering into an era of uncertainties, hence it makes sense to be cautious as well as conservative to protect the bottom lines.

Conserve and consolidate is guiding principle for the bank in 2020-21, which will not be a normal year.

In the operating expenses, salary has grown at a rate of 16%, after making full provision for the salary as per the IBA wage revision, so there was 15% additional offer and the bank has provided fully

Further, the superannuation benefit for the pensioners as well as the gratuity and leave encashment went up by 6.5 times from Rs 25.46 crore to Rs 163.19 crore due to decline in bond yields. Superannuation benefit for the full year were Rs 211 crore, whereas last year it was just Rs 3.61 crore.

However, other expenses declined 15% to Rs 207.69 crore from Rs 243.79 crore last year

Cost-to-income ratio increased from 57.97% in FY2019 to 59.62% in FY2020 of course mainly on account of provision made towards superannuation related benefits.

NIM has almost remained steady at 2.86% from 2.87% last quarter.

GNPA improved to 4.82% from 4.99% end December 2019, but rose from 4.41% end March 2019. Similarly, the net NPA improved to 3.08% from 3.75% end December 2019, while rose from 2.95% end March 2019.

The fresh slippages were Rs 304 crore in Q4FY2020 versus Rs 402 crore in Q4FY2019, whereas the reduction and upgradation recovery all put together is Rs 281.60 crore versus Rs 292.09 crore

The slippage ratio stood at 0.57% in Q4FY2020 and 0.80% in Q4FY2019 and full year FY2020 it was at 3.75%.

The NPA provision during FY2020 has gone up substantially on account of good operating profit. credit cost for the full year stood at 1.95%.

Provision coverage ratio which was at 58.45% end March 2019 has significantly gone up to 64.70% end March 2020.

The capital adequacy ratio eased to 12.66% from 13.17% a year ago.

SMA2 book has dipped from Rs 168.41 crore a year back to Rs 23.65 crore.

The recovery under written-off accounts has also shown some positive traction to Rs 95.82 crore in FY20 versus Rs 51.18 crore in FY2019.

Business Turnover has increased 4% to Rs 128749 crore, as deposits grew 5% and advances moved up at muted 4%.

The bank has been highlighting that it would focus more on the retail and mid-corporate and not much on the corporate book. Retail advances share rose from 42.85% end March 2019 to 45.49% end March 2020 and mid corporate advances (i.e., Rs 5 crore to Rs 100 crore) has gone up from 26.85% to 28.71%. Similarly, the corporate advances (i.e. more than Rs 100 crore) have declined to 25.80% from 30.30% a year ago.

CASA ratio is now at 28.91% versus 28.06% about a year back.

There is some positive traction in the yield on advances rising to 9.41% from 9.26%, cost of deposit which was at 5.97% about a year back further declined to 5.88%. As a result, interest spread which was at 3.29% has slightly improved to 3.54% during this Q4FY20.

Restructured advances have come down from Rs 872.16 crore about a year back to Rs 536.49 crore.

About 34.67% of customers by number have opted for the moratorium and by value it amounts to 46.62%.

In NBFC book, about 10% by value and about less than 5% by number had availed the moratorium so far. NBFC which have taken moratorium is from housing finance and others is commercial finance.

In agriculture sector as of 31 May, 19.34% of the customers by number and by value around 39.98% had availed moratorium.

The bank has absorbed the entire 10% covid 19 provisions upfront in Q4FY2020, even though there was a regulatory provision to absorb 5% and amortize another 5% for the next quarter. Apart from this 10% provisioning, bank have not provided anything on contingent basis

Four fraud accounts amount outstanding as well as the provision were Dewan Housing is Rs 180.13 crore, Religare Finvest it is Rs 43.44 crore and LEEL Electricals is Rs 20.65 crore. These are the three accounts and in another account, Fedders Electrical and Engineering of Rs 41.30 crore where the bank had full provision. All these four accounts were NPAs and the bank was consortium members with minority share of less than 1%.

The provisions of 25% was created for fraud accounts and remaining 75% is charged to the reserve. Thus, fully provided but by charging to the reserve which has to be reversed subsequently on quarterly basis in the remaining three quarters. So it may come to around Rs 60 crore per quarter for the next three quarters.

Coffee Day Global had total sanctioned limit of Rs 183 crore and that was brought down to Rs 153 crore, and now it is further brought down to Rs 130 crore and it is performing and up-to-date interest is serviced and for that the bank has a security of around Rs 155 crore. They have not taken moratorium. Account is standard.

External rating exposure below BB book of Rs 1392 crore is comfortable, because, they are dealing with bank for quite a long time.

The bank has received the final permission for the wholly-owned non-financial subsidiary, named as KBL Services which will be launched very shortly.

The total provisions towards NPA is Rs 1108.22 crore and provision towards standard advances is Rs 35.17 crore in FY2020.

Provision made during the year Rs 1297 crore, out of which Rs 189 crore is debited to the reserves and balance is debited to the profit and loss account.

Total risk weighted assets is Rs 52,708 crore end March 2020.

The bank will take call on capital raising at appropriate time.

Outlook

The bank is seeing limited growth opportunities because of the situation currently prevailing and has to adopt wait and watch strategy

The bank is targeting 8-9% credit growth for FY2021.

It will be focusing more on retail and mid corporates and CASA, trading profit, as well as recovery & NPA management and third-party products.

The bank is taking forward digital sanctions and proposes to cover the majority of retail portfolio under the digital journey.

The bank is now focusing on overall efficiency enhancement and some improvement in cost control measures

This is the year wherein all have to focus more on conserving the capital and also curtailing the costs.

Focusing more on the bottom line, so as to conserve, consolidate, and emerge stronger, that is the business mantra for Bank for the current year.