Highlights:

New MD of the bank has joined the bank on 29 July, who has 40 years of banking experience in driving customer-centric business initiative. He has worked in southern parts of the country, including Tamil Nadu, for more than 2 decades, where the bank has strong presence.

The strength of the bank lies in its balance sheet, with a high capital adequacy ratio of above 18%, PCR of around 73% and a CD ratio of 80%, liquidity coverage of over 300%, with NIM consistently above 3%.

Bank has been at the forefront of adopting latest technology and coupled with a customer base of over 7 million, there's a huge opportunity to upsell and cross-sell business.

The bank has undertaken digitalization of various processes, which will support the growth, improve credit delivery and bring quality in underwriting standards.

Bank has also inducted professionals with expertise in their area of operation at highest management level to lead the bank towards its future goals.

The CASA deposits have grown 9%, while CASA deposits ratio has improved to 33% and is moving towards banks aspirational target.

The loan book remains flat sequentially and declined over a year ago. The portfolio of IBPC at Rs 1000 crore is repaid, while the bank has shut down commodity business with the book of Rs 500 crore in warehouse loan portfolio. The bank has consistently reduced corporate exposure and Rs 1500 crore of corporate advances have come down when compared to the last year.

On the other side, the jewel loan book surged 26% to Rs 3055 crore, while it has grown by Rs 769 crore in a quarter.

Under emergency credit line, as against the eligible amount of Rs 3760 crore, the bank has disbursed Rs 775 crore up to June.

The bank has been consistently reducing cost of deposit to 5.37% and it was 5.05% in June 2020 month. The cost of deposits would further moderate ahead.

The yield on investments has reduced substantially to 5.67%, as Rs 7000 crore worth of investments has been deployed in the short-term instruments to ensure that the bank is mitigating the market risk.

NIM is at 3.36% levels as against 3.49%, but bank is going to maintain NIM stable in spite of challenges.

The treasury income stood at Rs 178 crore as against Rs 67 crore last year.

There is a marginal increase in the staff expenses due to the AS-15 provisions.

About 41% of loan book is under moratorium from 51-52% in May 2020. The loan book under moratorium is 37% excluding jewel loan, 48% excluding the term loan and 47% excluding working capital. About 66% of customers under term loan have paid at least 1 EMI and forms 32% of overall moratorium book. Even though the 1 installment is not paid, the bank considers it under the moratorium book.

Out of overall moratorium book, around Rs 8630 crore is the term loan component. Of this 34% or Rs 3958 crore, there is not even a single payment, while remaining 66%, at least they have paid 1 installment. About 49% of these Rs 8630 crore has paid 1 EMI, 2 EMI is 10%, 3 EMI is 2%. About 1% has made prepayment.

The substantial amount of non-paying portfolios under moratorium book constitutes the personal segment such as home loan or the LAP, while there is a very limited unsecured portfolio of the bank.

The 6 months moratorium period ends in August 2020. August month is going to be hectic. The branches would talk to their respective customers and then understand the requirement.

If the customer is having sufficient balance, the bank will take the mandate and debit their account. The bank would also convert the loan into FITL wherever the customers wants during the month of September.

As per the Reserve Bank of India guidelines, banks have to create 10% provisions for SMA accounts that constitutes around Rs 889 crore. So, the bank should have provided Rs 89 crore, but the bank has provided Rs 120 crore.

SMA book that is SMA 30 DPD is 1.32%.

PCR has improved 73% as against 59% a year ago

The moratorium book initially stood at 50% to 52%.

The security coverage in the case of MSME ranges from 120% to 160%. In case of commercial loans, there is no unsecured loan. Entire commercial portfolio is completely secured. So, the bank do not expects any challenge in commercial loans. Even the account becomes NPA, the bank will be in a position to recover maybe some time lag and time delay will be there because of the environment.

In the corporate segment, the bank has complete information of each account. The bank has maximum exposure of Rs 125 crore in each account. The corporate portfolio is doing well. First time after a very long time, the bank has seen a nil slippages. The bank is not able to identify any big or challenging account, which may create problem. The bank does not have any unsecured accounts.

The yield on agri gold loan is 8.5 to 9%.

In the first quarter, the gross slippage is only Rs 40 crore. The slippages are expected to similar in second quarter. There would be slippages challenge in December 2020 quarter.

The bank do not see challenges in the non-moratorium portfolio.

Originally, the bank predicted credit cost around 1.25% to 1.5%. Now, the bank expects the credit cost at 1.5% to 2%. Even in worst case the bank expects credit cost to be 2% to 2.5%.

Roughly 48% to 49% of loan book is from Tamil Nadu.