As the Supreme Court has directed Banks that the accounts which were not declared NPA till 31 August 2020 shall not be declared NPA till further orders, pending disposal of the case by the Supreme Court. Pursuant to the order, the Bank has not classified any borrowal account which has not been declared as NPA as at 31 August 2020 and the fresh slippages of loans were negligible for the second straight quarter in Q2FY2021.

The bank has improved asset quality with the reduction in the GNPA ratio to 3.16% end December 2020, while the GNPA ratio including the accounts not classified as NPAs due to Supreme Court order rises by 79 bps to 3.95%. Further the bank has also identified Rs 1030 crore or 1.9% of loans for one-time restructuring. Thus the bank has additional stress assets amounting to 2.7% of loans.

However, the bank held COVID 19 provision of Rs 97.99 crore at the end September 2020. Further the Bank has as a prudent measure made an additional ad hoc provision of Rs 50 crore during the quarter ended December 2020. Thus the aggregate provision against the likely impact of COVID 19 including RBI mandated provision is Rs 147.99 crore end December 2020.

The CASA ratio has improved further to 30.07% end December 2020. On the advance front, the share of retail loans further improved 51% at the end December 2020. However, the business growth was moderate at 1% at the end December 2020. The operating profit of the bank has been impacted due to increase in employee cost and decline in non-interest income.

Asset quality improves: Bank has improved asset quality in the quarter ended December 2020 with the dip in fresh slippages of advances.

• Fresh slippages of advances were negligible at Rs 1.4 crore in Q3FY2021 from Rs 2.21 crore in the previous quarter.
• Meanwhile, the recoveries, upgradations and write-off stood at Rs 483.63 crore for the quarter.
• Outstanding standard restructured advances of the bank increased to Rs 609.78 crore (1.15% of advances) at end December 2020 compared to Rs 393 crore (0.72% of advances) at end December 2019.
• RWA declined 2% to Rs 50863 crore at end of December 2020 from a year earlier.

Business growth slows: Business of the bank rose mere 1% yoy to Rs 127014 crore at end December 2020. Deposits increased 3% to Rs 73826 crore, while advances dipped 3% to Rs 53188 crore at end December 2020. Credit-deposit ratio eased to 72.05% at end December 2020 from 76.95% at end December 2019.

CASA ratio improves: CASA deposits increased 14% to Rs 22199 crore. CASA ratio improved to 30.07% at end December 2020, compared with 27.39% a year ago.

Retail loans rise, corporate loans dip: Advances declined 3% at Rs 53188 crore at end December 2020, as corporate advances plunged 41% to Rs 8228 crore. The retail advance galloped 7% to Rs 27355 crore and mid corporate loans moved up 13% to Rs 17605 crore at end December 2020.

• Retail advances gained share to 51.43% at end December 2020 from 46.56% at end December 2019.
• Priority sector loans (PSL) of the bank stood at 47.61% of advances at end December 2020, while consistently exceeding the regulatory PSL target of 40%, while increased from 44.57% a year ago.

Investment book of the bank increased 15% to Rs 20660 crore at end December 2020. Share of AFS book eased to 20.05% at end December 2020 from 23.20% a quarter ago and 25.40% a year ago. The modified duration of the AFS book was 4.18 years, while that of the overall investment book was at 5.75 years at the end December 2020.

Network expansion: Bank has reduced 2 branches and 2 ATMs in the quarter ended December 2020. Bank has a network of 857 branches and 1014 ATMs at end December 2020.

Book value stood at Rs 191.4 per share at the end December 2020. Adjusted Book value (excluding NNPA and 10% of restructured assets) was at Rs 159.8 per share at end December 2020.

NII growth accelerated, as NIMs jumped: For the quarter ended December 2020, the bank posted 2% decline in interest income to Rs 1595.5 crore, while interest expenses dipped 12% to Rs 981.45 crore. NII jumped 21% to Rs 614.05 crore, as net interest margin (NIM) jumped to 3.26% in Q3FY2021 from 2.83% in Q3FY2020.

Non-interest income dips: The non-interest income of the bank has declined 27% to Rs 273.12 crore in Q3FY2021. The core fee income of the bank fell 17% to Rs 183 crore, while trading income dipped 51% to Rs 89 crore in Q3FY2021 over Q3FY2020.

Net Total income rose 1% to Rs 887.17 crore in quarter under review.

Expense ratio jumps: Operating expenses increased 19% to Rs 449.2 crore. The employee cost jumped 43% to Rs 267.25 crore in Q3FY2021, while the other operating expenses declined 5% to Rs 181.95 crore. Expense ratio moved up to 50.63% in Q3FY2021 compared with 42.97% in Q3FY2020.

The operating profit declined 13% to Rs 437.97 crore in the quarter ended December 2020.

Provisions decline: Bank has witnessed decline in provisions and contingencies to Rs 214.18 crore in Q3FY2021 as against Rs 314.7 crore in the corresponding quarter last year.

The Profit before tax (PBT) increased 20% to Rs 223.79 crore in Q3FY2021 over Q3FY2020.

Banks tax provisions stood at Rs 88.41 crore in Q3FY2021 against Rs 63.95 crore in Q3FY2020.

Net profit moved up 10% to Rs 135.38 crore in Q3FY2021.

Financial Performance 9MFY2021

For the nine-months ended December 2020 (9MFY2021), the bank has posted a 12% increase in net profit to Rs 451.2 crore. The net interest income improved 15% to Rs 1724.04 crore, while non-interest income jumped 31% to Rs 1121.85 crore in 9MFY2021. The expense ratio dipped by 306 bps to 43.24% in 9MFY2021 compared to 46.30% in 9MFY2020. The operating expenses increased 13% to Rs 1230.45 crore, while provision and contingencies surged 34% to Rs 1045.38 crore. The profit before tax has increased 17% to Rs 570.06 crore in 9MFY2021. After considering 20.85% of effective tax rate, the net profit increased 12% to Rs 451.2 crore in 9MFY2021.