Highlights:

The bank has continued to follow the strategy of conserve consolidate and emerge stronger in FY2021. It has taken abundant precautionary measures at the earlier, helping to consolidate its position.

The operating profit is down slightly in Q3FY2021 due to lower trading profit and higher superannuation benefit related expense, while the bank has improved its operating profit in 9MFY2021.

The interest income is flat in Q3FY2021, while bank has posted sharp 11.88% decline in interest expenses for Q3FY2021 and 7.31% in 9MFY2021. Thus, NII has surged 20.94% in Q3 and 14.85% in 9M.

NIM has improved sharply to 3.26% in Q3FY21 up from 2.83% last year, while it has moved up to 3.07% in 9MFY21 from 2.82% last year. The bank has achieved its long term objective of maintaining NIM above 3%, while it expects to sustain NIM above 3% ahead.

Other income is down due to lower trading income in Q3FY2021.

The bank has not classified NPAs after 31 August 2020 in line with SC order. However, as per the bank, NPAs would have been higher by Rs 337.23 crore end December 2020 in addition to Rs 90.15 crore end September 2020 totaling to Rs 427.38 crore in the absence of SC order.

Including these proforma NPAs, GNPA would have been higher at 3.95% compared with the reported GNPA of 3.16% end December 2020, while NNPA would have been 2.42% against reported NNPA of 1.74%. However, the proforma GNPA and NNPA is still showing improvement from December 2019 level.

The bank has created NPA provisions for proforma NPAs as per IRAC norms.

The Credit cost for the bank stood at 0.32% in Q3 and 1.30% in 9MFY2021.

The bank has improved PCR to an all time high of 80.51% end December 2020.

The bank has posted healthy performance in the recoveries in written off accounts, which is best in the recent history.

The loan book of the bank has declined 3%, while the focus is on retail and mid-corporate loans and minimizing dependence on corporate loans. The retail and mid corporate loan book is up 9.75%, while the large corporate book is down 14.41% end December 2020 over December 2019.

The share of retail loan has increased to 51.16% from 46.11% and mid corporate to 32.82% from 28.25%, while that of large corporate loan has declined to 15.55% from 25.19%.

The bank expects the trend to continue and share of corporate loans to decline below 15% by March 2021, which would keep overall loan book flat at end March 2021. However, the bank is targeting double digit loan growth for FY2022.

The bank has posted strong 13.57% growth in CASA deposits higher than 3% growth in overall deposits. CASA ratio has improved to a new high of 30.07% end December 2020. Banking is targeting to improve CASA ratio to 31-32% in next one year.

The bank has witnessed marginal decline in the yield on advances to 9.39% from 9.45% on account of competitive rates and reduction in MCLR rates.

The cost of deposits has dipped to 5.14% from 6.02% helping to improve spreads to 4.25% from 3.43%.

The restructured loan book of the bank stood at Rs 689.80 crore end December 2020.

The proportion of digital transactions has increased to 88.77% end December 2020 and is likely to rise to 90% by March 2021.

Majority of retail loans are digitally sanctioned forming about 65-70% of daily sanctions.

About 1.74% of loans are under moratorium end December 2020, which are eligible for one time restructuring benefit. As per the bank, 50% of these loans may come out of stress, while 50% may slip to NPAs.

The SMA 2 loan book stands at Rs 342 crore end December 2020.

Bank has identified Rs 1030 crore of loans for restructuring, which would be implemented by March 2020

The fresh slippage of loans stood at Rs 1.4 crore in Q3FY2021

The bank expects slippage rate 1-1.5% for FY2021.

The bank aims to improve ROA to 1 and RoE to double digit level in short term.