Nupur Mitra completed a year at the helm of Dena Bank last month. Her tenure as the bank’s chairperson and managing director will end on December 31, 2012. She became the first woman to head the bank when she took over in November 2011. According to her, “healthy profit growth and stricter control on bad loans” are the biggest achievements in her stint so far. Mitra shared her experience and her plans going forward as she prepares to steer the bank for last two months in an interview with Megha Mandavia and Parnika Sokhi. Excerpts:
How has the July-September quarter been for Dena Bank?
It is my last quarter and I am happy that I have beaten the trend. All public sector banks are slightly depressed this time, but we have been able to achieve whatever we had planned. A growth of about 23.79% in net profit at `239 crore for the second quarter is very much in line.
Why have the net interest margins (NIMs) fallen from 3.22% last year to 2.86% in second quarter?
We rationalised lending rates for priority sector and small and medium enterprises (SMEs) in order to boost growth and avoid slippages. That helped us maintain the asset quality with net NPA ratio at 1.22% and gross NPA ratio at 1.97%. We insisted on credit ratings even for existing customers.
Where did credit growth come from in the last quarter?
Sequentially, we saw negative growth in credit. However, annual loan growth was around 40% in priority sector, 36% in MSMEs and 13.9% in retail segment. We also made portfolio purchases but all belonged to ‘AA’ category or above. We have been very selective in corporate lending.
What are the financial year-end targets that the bank is working towards?
I have maintained the loan growth target at 18% and deposit growth at 16%. Gross NPA ratio should stay below 2% and net NPA ratio should go below 1%, while the NIMs should be around 3% for the rest of the year. In terms of credit growth, we are going aggressive on priority lending because we need to achieve the 40% mandate by end of March 2012. With declassification of loans worth `2,000 crore, our priority sector lending has fallen to around 30%.
Any plans to revise lending rates?
The recent 25 basis point cut in cash reserve ratio by the Reserve Bank of India has released `200 crore for us. The impact of higher provisioning on restructured loans will be about `27 crore. We had tweaked the spreads for various segments earlier. Now, I think there is a possibility of a base rate cut as soon as the cost of funds start easing. Our base rate is 10.45 %. We aim to bring down the dependency on bulk deposits to 15% of total deposits by end of next quarter.
What are your plans after the completion of your tenure at Dena Bank?
I want to just hang up my boots and relax.