South Indian Bank CEO Expects Impact Of Provisions On Profitability To Ease
The asset quality of the new loan book has held strong, says Murali Ramakrishnan.
South Indian Bank Ltd. will likely see the impact of provisions drop in the upcoming quarters as the asset quality of the new loan book has held strong, according to Managing Director and Chief Executive Officer Murali Ramakrishnan.
"The existing book has been churned very well with the new book and the new book is impeccably clean. We have added about Rs 33,000-34,000 crore of loans in the new book from October 2020," Ramakrishnan told BQ Prime in an interview. The new loan book has a gross non-performing asset ratio of 0.03% which means it is "impeccably clean" he said.
As of Sept. 30, the bank's gross NPAs stood at Rs 3,856 crore, or 5.67% of the total book. Total provisions during the second quarter were at Rs 179 crore, down 57% year-on-year.
Provision coverage ratio, including write-offs, stood at 72.8%, up from 65% a year ago.
"Excluding write-offs...we are at 57-58% PCR as we are talking. The first milestone is to take it to 60% and then raise it to 65% by either March or June next year," Ramakrishnan said.
As the bank continues to churn its existing book with fresh loans, the effective rate of provisioning will come down, he said.
"To that extent provisioning etc will keep coming down and given that we are already well provided for on the PCR, we are sure that the impact of profitability will be lessening as we go forward," Ramakrishnan said.