Oriental Bank of Commerce is confident of achieving a net interest margin of 3 per cent in the current fiscal. The public sector lender is eyeing 15 per cent growth in net profits in 2013-14 despite challenges such as downward pressure on lending rates and deteriorating asset quality.
OBC’s Chairman and Managing Director S. L. Bansal spoke to Business Line on a wide range of issues affecting the bank and the banking industry.
Excerpts from the interview:
What is the situation on the bulk deposits front?
We have reduced the level of bulk deposits. It has come down from Rs 43,000 crore in the previous year to about Rs 35,600 crore as of end-March this year.
It is now around 20 per cent of our overall deposits. We will look to bring it to 15 per cent this fiscal.
There is certainly an aspiration to further shed bulk deposits. But we have to take a balanced approach on this.
What about deposit rates? Any plans to cut them further?
Depending on the market conditions, we take a call from time to time. We will test the market. There is certainly a softening bias to interest rates.
There is criticism that bankers are not passing on to customers the benefits flowing from any cut in repo rate by the RBI?
That (criticism) is not entirely valid. We (OBC) have been reducing our lending rate. But the situation is different for different banks. Cost structures are different.
In the financial year just ended, how has the bank fared? Can you share some numbers?
We have done reasonably well both in terms of overall business growth, top-line and also bottom-line. The final numbers are yet to come. We will release it in the first week of May.
So do you expect to sustain the growth momentum in these difficult times?
We should be able to achieve 15 per cent growth in bottom-line this fiscal. That is not a bad target to look at. We will certainly increase monitoring of assets and ensure that further slippages do not occur.
What about credit growth for 2013-14?
We will get good guidance from the RBI next month for the entire banking system. It all depends on that. But OBC has been in the 15-16 per cent growth level on advances, which is quite good.
There is a rumour that HSBC is looking to exit from the three-way life insurance joint venture (Canara, HSBC, OBC), as part of its global strategy to exit from insurance?
Officially we have not heard anything on this. So it is premature to talk about it.
On direct benefits transfer, are banks finding it difficult to meet the expectations of the public?
I don’t think so. Banks have a robust payment mechanism. The challenge is to get the right list of beneficiaries and the Government has a key role to play in this.
Wherever the list of beneficiaries is finalised and bank accounts ceded with Aadhar are in place, the cash or benefit transfer will happen seamlessly.
The issue is there has to be more coordination between banks and district authorities.
What about your branch expansion this year?
We will look to add 100-125 branches more. We added 375 branches in the last two years. Currently, we have a network of around 2,000 branches.
All efforts are being made to have at least one ATM in every branch of the bank. We will achieve this milestone this fiscal.