Highlights:

The bank has improved deposits by 2% to Rs 41421 crore, while advances have increased 6% to Rs 35437 crore.

NIM improved to 4.12% for Q2 and 4.05% for H1FY2021.

The bank is observing a lot of improvements in activity levels.

The activity level in both numbers of transactions and value has crossed pre COVID levels for the bank.

The Government guaranteed ECLGS Scheme has boosted the spirit of MSME sector and businesses have started generating surplus.

The bank had given moratorium to all eligible customers, while accounts covering 70.07% of total exposure received payment for four months, as if there was no moratorium end June 2020.

Post the end of moratorium period on 31st August, 2020, accounts covering 90.52% of exposure received payments for September demand, while for 9.03% of total exposure not even a single payment received during moratorium period, fully utilizing the moratorium.

Out of them 4.94% of total exposure have paid the demand portion of one monthly installment in the month of September 2020, after fully utilizing the moratorium. Of the balance 4.09% of exposure have not paid anything till now. Bank expects many of them would opt for restructuring since the time is available up to 31 December 2020.

Most of these accounts are viable accounts having no issues up to 29 February 2020 and affected by COVID. Many accounts in this category belongs to sectors like Hotels / retail trade etc., which got opened up later, currently working at less than 50% capacity and will take a couple of more quarters to come back to normalcy.

The bank has restructured 175 borrowal accounts to the tune of Rs 478 crore till September 2020 of which 131 are under MSME amounting to Rs 455 crore and the remaining 44 in Non-MSME amounting to Rs 23 crore.

Further, 162 borrowal accounts amounting to Rs 430 crore under MSME and 124 borrowal accounts amounting to Rs 729 crore in Non-MSME category are under process. Total restructuring will be 5-6%.

As shared in the earlier conference calls, the bank expect slippage ratio for the current financial years at 3% to 3.5%. Most of them will be accounts which had issues even before COVID.

The loan growth of the bank is driven by disbursal of ECLGS loans and gold loans only. The bank will review credit growth in Q4 and till then focus will be on ECLGS, Gold loans or restructuring of facilities only.

The increase in disbursement of ECLGS & Gold loans has resulted in improvement of CAR to 17.36% end September 2020 from 16.29% end March 2020 on account of the zero percent risk weight prescription.

The SMA accounts saw a big reduction from Rs 628 crore end July 2020 to Rs 412 crore end September 2020. The interest income accounted in those accounts arrived at Rs 33.57 crore for 7 months from March 2020 to September 2020, of which Rs 25 crore has been reversed in Q2FY21.

NIM improved 14 bps qoq to 4.12%, even after reversing Rs 25 crore of interest income, otherwise NIM Is rising to 4.33%. There is pressure on yield. But cost reduction is more than yield reduction.

The bulk deposits have declined to 9.15% end September 2020 from 11.33% end September 2019. The CASA ratio has improved to 26%.

The bank expects slippage ratio to be in the range of 3-3.5% for FY2021.

Depending on slippage and recovery for full FY2021, the bank may have ROA between 1% and 1.25%.

The bank will reach pre-COVID level ROA by second half of FY2023. If recovery gets better, achievement of pre COVID level may get pre-poned by a few quarters.

The bank has sanctioned Rs 1807 crore under ECLGS.

The bank has necessary approvals in place for raising capital, if at all the bank require anything for augmentation.

The bank expects cost-to-income ratio at 42- 44%

The bank made a provision of Rs 115 crore in Q2 for future Covid related provision requirements after Rs 100 crore in Q1, which is not used for Net NPA calculations. Totally, the bank has a made an adhoc covid provision of Rs 317 crore.

The cyber attack on ATM network during Dec 18 led to loss of around Rs 31 crore and in the month of October 2020 the bank has received an insurance claim of Rs 15 crore against the loss which will be accounted in Q3FY21.