Date:17/11/2005 URL: http://www.thehindubusinessline.com/2005/11/17/stories/2005111702700600.htm

Back `Public issue by January likely'

THE Chairman and CEO of South Indian Bank, Mr V.A. Joseph, says that the bank's NPA has come down to 3.09 per cent from 4.61 per cent.

The bank hopes to hit the market by January with a public offer. The following are the excerpts from CNBC -TV18's exclusive interview with Mr Joseph.

You have registered a net interest income growth of 27 per cent, the markets like it but can you sustain it?

Yes, definitely. Earlier, it was dependent more on treasury income. Last year, in this figure there was a shift of Rs 1,600 crore towards retail advances and the treasury. From Rs 4,000 crore, it has come down to Rs 2,400 crore. It will be sustained. If one looks at the credit-deposit ratio, it is now at around 75-76 per cent.

In the first half of the year, we had taken this actual revaluation for the retirement benefits of the employees. Plus this actual revaluation and the additional expenditure of Rs 12 crore that has come in the first half of the year, which is not expected to be repeated in the second half.

Did you see any increase in your net interest margins?

Margins have gone up. It was less than 2.7 last year and now it is 3.1. If you look at the net interest margin also, there is improvement.

Could you tell us what sort of fee-based growth you have had because your other income has gone up quite substantially as well and your provisions have gone down. So where do your NPAs stand at this point?

If you look at the net NPA last year and this year, there has been a reduction. The gross NPA has come down from 7.29 per cent to 6.35 per cent and also the net NPA has come down from 4.61 per cent to 3.09 per cent. By the end of this year, it will be below 2.5 per cent.

When will you decide on a price band for your public offer?

By January, we hope to be in the market and just before that, it will be announced.

Your NPAs are at 3 per cent plus, but your provisioning is down from Rs 60 crore to Rs 20 crore. Why are you cutting down provisioning so aggressively?

Last year provisions were inclusive of the provision for investment. But this year, since we have shifted the securities to advances, much provisioning was not required. For advances, we have made full provision and we could substantially contain NPAs this year.