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Published on January 1, 2023
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After March 13, there will not be any lock-in for any of the shareholders of the bank. We are not worried about the situation because if you have seen our performance we have been able to do very well, and the bank is moving in the right path. Our stock price has also gone up over time. We don’t think investors would start selling their shares.
The thought process has been very clear – whatever has to be done, we are not postponing anything. We are not keeping any pain in store. Right from the first quarter, there has not been a single instance where any problem has been postponed, and we are proud of it.
Instead of looking for growth in terms of percentage what we are looking more in terms of are we growing better than the market, and we are growing profitably. In the current times, on the deposit side, we are at 13 per cent growth, more than the industry average of 9 per cent. On loan growth, retail [loans] has been 40 per cent-plus, SME has been about 30 per cent, and in large corporates there is a degrowth of 18 per cent, which is impacting our overall loan growth. In large corporates we have a degrowth for three reasons – we would not like to do transactions where the pricing is not reflecting the risks. We are very clear that pricing must be as per the risk. Second, we have seen some prepayment because we were not willing to give them loan at lower rate. The third part is that in where some of the stressed assets where payment was due we are getting the money. Overall, as per our strategy, we are growing more on the retail and SME segments.
There’s a third factor. If there is a large NPA book, that will also depress NIMs. After the JC Flowers transaction, when the net carrying value of NPA comes down, you will see an upside on the NIMs; it could be around 20-30 bps. I see opportunity for NIMs on the yield side; I don’t see much on costs. Our operating cost to assets is around 2.6 per cent, which is what even the best of banks has. The issue for us is that we were not having the right kind of income-generating assets because of the NPA issues. Now, we have a control on our slippages, NPAs are coming down, and we are not willing to lower our pricing. All these would help in getting better NIMs. For us the solution is only in terms of getting more interest income
We are still the sixth largest private sector bank. Rs 3.3 lakh crore would not appear as a very large balance sheet, but in comparative terms it is. Another thing is the value and capability of this franchise to grow. We have both, to grow organically and inorganically. Once the lock-in period ends, I think the bank would be on a very sound footing to explore any inorganic growth opportunity.