Its head of strategy Jaideep Iyer on Thursday explained that the NII growth came on the back of a recognition of an interest income on restructured assets which was not being done earlier. The NIM trajectory will also come down to 4.5 per cent level, he said.
He said the bank had charged fees on credit cards on aspects like late payments during the moratorium period which has been reversed, and the other income line will normalise going forward.
On the asset quality front, its stock of gross non-performing assets reduced to 4.40 per cent in the latest March quarter as against 4.84 per cent at the end of the preceding December quarter, as the gross slippages declined to Rs 619 crore from the Rs 766 crore in the quarter-ago period.
The bank’s interim chief executive and managing director Rajiv Ahuja told reporters that it is targeting for an overall balance sheet growth in the high-teens to the early 20s which will include a retail assets growth of 25 per cent on the back of performance in segments like credit cards, micro loans, housing and used car lending.
For the reporting quarter, its core Net Interest Income (NII) grew 25 per cent to Rs 1,131 crore, despite a tepid 2 per cent advances growth while the Net Interest Margin (NIM) widened sharply to 5.04 per cent.
The other income declined 7 per cent to Rs 511 crore, which was attributed by Iyer to a reversal of up to Rs 50 crore in fee income.
It set aside Rs 400.67 crore in overall provisions during the reporting quarter as against Rs 626.64 crore in the year-ago period and Rs 423.88 crore in the quarter-ago period.
Ahuja said the bank took a decision to set aside Rs 187 crore as additional provisioning over and above what is required under the norms in order to strengthen its book and take care of expected losses in the GNPAs and restructured book of Rs 1,964 crore.
With the additional provisioning, which takes the provision coverage ratio to 70.4 per cent, the bank is confident of meeting any challenges and can focus on growth in the new year, Ahuja said, adding that it expects the wholesale advances to grow by up to 15 per cent over a longer term. The bank had an overall capital adequacy of 16.82 per cent as of March 31, 2022.
Ahuja said the same will go up by 1 percentage point on the back of a USD 100 million fundraise to be completed through a private placement of tier-2 bonds in a few days. There is no need for core equity capital after that, he added. Shares of the bank closed 6.05 per cent down at Rs 101.75 a piece on the BSE on Thursday as against a 2.14 per cent correction on the benchmark.