The Hindu Business Line : Syndicate Bank’s interest earnings may be pressured

Bangalore, Jan. 3 Public sector Syndicate Bank’s interest earnings are likely to come under pressure this financial year with the sharp fall in lending rates.

Speaking to newspersons here on Friday, Syndicate Bank’s Chairman and Managing Director, Mr George Joseph, said, “We are beginning to see some repricing of loans this year. Therefore, some pressure is likely on interest earnings.”

Besides, Mr Joseph said, “There could be some increase in non-performing loans and some additional provisioning may be required.” He, however, added that the bank has not faced any problems in its realty assets. Mr Joseph was speaking on the sidelines of the State Level Bankers’ Committee meeting held here.

Hopes on NIM

He said, despite the trends, Syndicate Bank hoped to defend its net interest margin (NIM) at the September quarter level of 2.74 per cent.

The NIM is the difference between interest earned and interest expenditure.

However, Syndicate bank’s net profit was unlikely to be impacted this year. This was largely on account of improved treasury earnings. The bank’s Government securities portfolio is worth about Rs 27,000 crore. About 77 per cent of the securities were in the held-to-maturity category. The remaining 23 per cent was marked to market, he said.

Mr Joseph also said that the bank had a 27 per cent growth in credit offtake this year, in line with the industry trend.

As a result, the bank was likely to exceed the gross business target for the current year. Gross business was now estimated at Rs 1.9 lakh crore as against the original estimate of Rs 1.74 lakh crore and Rs 1.6 lakh crore last year.

To meet the working funds requirements, Mr Joseph said the bank was stepping up its deposit growth.

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