“De-risking of the balance sheet is the way forward and that’s what we have done,” said PR Seshadri, Managing Director of Karur Vysya Bank, commenting on the higher provisioning made during the second quarter of this fiscal.
Provisions (other than tax) and other contingencies have swelled to ₹321.36 crore for the quarter ended September 2017 from ₹182.37 crore a year ago. “This (₹321 crore) includes ₹58 crore, which is on account of amortisation of assets to ARCs (asset reconstruction companies), and pertaining to the next quarter.
“By advancing it, the balance to be reversed in the ensuing quarter will be nil. Going forward, we want to create only for actual NPAs and restructured accounts and clean up our balance sheet,” Seshadri told
The resultant impact has been a steep slide in the bank’s net profit to ₹76 crore from ₹126 crore in Q2 last year.
Gross NPA doubled to 4.83 per cent (2.29 per cent) and net NPA, to 3.24 per cent (1.44 per cent).
Net interest margin improved 20 basis points to 3.81 per cent (3.61 per cent).
“Our landmark achievement basically was in crossing a total business of ₹1 lakh crore, backed by robust credit growth of 11.89 per cent. Total advances grew to ₹44,237 crore and deposits to ₹56,400 crore,” Seshadri said.
KVB, he asserted, “would re-focus on growing the retail and SME portfolios.”
“The bank had started lending to larger corporates five to six years ago. We consciously want to reduce our exposure to this segment and are at it.
“We have brought (large) corporate exposure levels from 42-43 per cent a few years ago to 32 per cent now;. SMEs account for 34 per cent, while retail and agri account for 35 per cent of the total exposure.
“We are also working on digital transformation to provide better service, strengthen the risk framework by working on centralised collection and building world-class analytical capability. This should set KVB apart from others,” he said.