Thursday, September 06, 2012

“ We are not looking at any bank acquisition right now”

For Karur Vysya Bank (KVB), the loan portfolio is spread across retail, big ticket corporate and the SME; the bank is getting adequate share of business from all services. P T Kuppuswamy (PTK), MD and CEO, KVB, talks to B&E’s Mona Mehta on various challenges and the growing importance of adopting technology in order to make best use of ATMs, mobile and internet banking services.

B&E: Globally the banking industry was rattled in the last two fiscals; did the global meltdown have an impact on the financials of Karur Vysya Bank (KVB)? What has been the difference in terms of financial performance of KVB in the last two fiscals?

PTK: KVB registered a total business of Rs.329.46 billion as on March 31, 2010, recording a y-o-y growth rate of 28.38%. Deposits increased by 27.62% from Rs.151.01 billion to Rs.192.71 billion. CASA (Current Account and Savings Account) segment registered a 37% growth year-on-year. The gross advances increased from Rs.105.62 billion as of March 31, 2009 to Rs.136.75 billion as of March 31, 2010, a surge of Rs.31.13 billion (a growth of 29.46%). Net profit for the fiscal was at Rs.3.36 billion up from Rs. 2.35 billion for the previous year. The Net Owned Funds (NOF) of the bank improved from `135.01 billion as on March 31, 2009 to `161.99 billion this year. During Q1 of the current financial year, the bank’s net profit increased to Rs.844.8 million, as against Rs.703.5 million for the corresponding quarter of the previous fiscal, registering a growth of 20.09%. Total business touched Rs.329.46 billion with deposits at Rs.192.71 billion and advances at Rs.136.75 billion.

B&E: ‘Economic recovery’ is the buzzword with banks back to doing what they do best - brisk business. How much of business is KVB planning to achieve in the current financial year vis-a-vis last year?

PTK: We are planning for a total business of Rs.420 billion with a deposit base of Rs.245 billion and advance base of Rs.175 billion. As of date, KVB has already crossed the Rs.350 billion mark, and we are positive of achieving our targets. During fiscal 2009-10, we had reached the total business mark of Rs.329.46 billion with a deposit base of Rs.192. 71 billion crore and advances level of Rs.136.76 billion. In effect, we are planning for about 27.50% year-on-year growth.

B&E: The Indian banking industry is already witnessing inorganic growth stories; is KVB also eyeing any small bank as a possible acquisition target in the near future?

PTK: As of now, we are not looking at any bank acquisitions and are relying on organic growth only. Should any suitable opportunity arise at a later date, we may not be averse to consider the same after careful due diligence.

B&E: Inflation is a cause of concern and banks have recently hiked their deposit rates. So, how will KVB protect its margins keeping in mind the demand and supply ?

PTK: At present, we have a comfortable resource base and hence have not revised our deposit interest rates. We are closely monitoring the situation and a suitable decision on the same will be taken once there is a good take off in advances during the upcoming busy season.

B&E: The growing size of non performing assets has been a cause of concern for the Indian bankers. How did KVB fare on this parameter?

PTK: As of June 2010, we had a low net NPA level of 0.17% which is one of the lowest in the industry. Our gross NPA was at 1.67%. As on March 31, 2010, it was at 0.23%. Moreover, as of March 31, 2010, our provision coverage ratio was at a high level of 87.53%. It is pertinent to note that while the credit portfolio of the bank grew four fold since 2003 from Rs.34.24 billion to Rs.136.75 billion, as of March 31, 2010, the Gross NPA during the same period had declined from Rs.2.55 billion to Rs.2.35 billion.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
Posted by at
Labels: , , , , , , , , , ,