The bank reported a net profit of Rs 1,209 crore from a loss of Rs 864 crore a year ago on the back of a 16% growth in net interest income (NII) to Rs 7,892 crore.
Retail loans grew 12% led by a 25% growth in auto loans, 20% growth in personal loans and a 38% growth in gold loans even as its domestic loan book shrank 2% due to a 10% fall in corporate loans as the bank shed low yielding loans.
CEO Sanjiv Chadha said he expects loan growth to pick up this year, which will help his bank grow its loan book by 7% to 10% including a 5% to 7% growth in corporate loans.
“Retail loans will still grow faster than corporate loans but we are seeing an uptick in demand from road projects, city gas projects and renewable energy projects, which will help demand,” Chadha said.
Other income increased by 63% to Rs 2,970 crore driven by a 28% rise in fee income and as gains from treasury and recoveries from written off accounts doubled. The bank gained Rs 530 crore from recovery linked to the defunct Kingfisher Airlines.
Gross NPA ratio declined marginally to 8.86% in June 2021 from 8.87% in March and down from 9.39% a year ago as recovery and upgrades increased to Rs 4,435 crore as against Rs 818 crore in June 2020.
Slippages mostly came from retail and loans to micro small and medium enterprises (MSMEs), indicating the stress from these books after the second wave. The bank expects full year recoveries of Rs 14,000 crore.
Chadha said he expects asset quality to improve this year as corporate loans remain stable and stressed MSME and retail loans will be restructured.
“We still think our slippages will remain below 2% of our book. Credit costs are likely to be in the 1.5% to 2% range with the bias towards the lower side of the range,” Chadha said. Credit costs fell to 1.36% in June 2021 from 1.78% a year ago.
Net interest margin (NIM) increased to 3.04% from 2.52% a year ago. Chadha said he expects margins to be sustainable at the current levels led by high yielding retail loans.