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Analyst Meet / AGM - Analyst Meet

Targets advances-deposit growth of 19% for FY2015

Vijaya Bank

08-May-2014, 11:14
Vijaya Bank conducted an analyst meet on 07 May 2014 to discuss financial performance for the quarter ended March 2014 and the prospects of the bank. V Kannan- Chairman and Managing Director addressed the meet:
Highlights:

Bank is focusing on reducing the cost of deposits and improving the yields on loans. Bank has continuously reduced the bulk deposits, while it has also raised the base rate by 05 bps effective 07 April 2014, which is expected to contribute to the NIM improvement in Q1FY2015.
Bank proposes to improve the NIM to 2.35-2.40% in FY2015 from 2.02% in FY2014.
The trading profit in FY2014 was impacted as the trading opportunities disappeared after 13 July 2013. Most of the fee income growth of the bank is related to advances growth.
Bank has made all required provision for employee benefit. The employee provisions had the impact of additional Rs 100 crore of provision for FY2014. Further, the employee legal pension cases passing in favour of employees caused additional pension provision burden of Rs 48 crore in FY2014.
Bank also had to incur additional expense of Rs 30 crore to fulfill service tax liabilities.
Bank has made provision for wage revision at the rate of 10%.
Bank has also made provision of Rs 130 crore for MTM depreciation of investment in FY2014. Bank expects the MTM provision not to be repeated in FY2015.
Government infused about Rs 250 crore of equity during Q3FY2014, while also converted perpetual preferential shares worth Rs 1200 crore in Q4FY2014. Thus, the Government holding in the bank has jumped to 74% at end March 2014 from 58% at end March 2013.
Bank has been improving asset quality for last two quarters, while expects to maintain and contain asset quality in FY2015.
The fresh slippages of advances stood at Rs 2174 crore for FY2014, which were mainly on account of gross accounting method for fresh slippages of NPAs. The delinquency ratio for FY2014 stood at 1.5%.
Bank has sold about 9 accounts with the exposure of Rs 110 crore to the Asset Reconstruction Companies (ARCs) in Q4FY2014.
Outstanding restructured advances of the bank stood at Rs 4235 crore at end March 2014. About 255 crore of restructured advances have slipped to NPA category. Thus, the standard restructured advances stood at Rs 3980 crore. However, of the standard restructured advances about Rs 703 crore are into SMA-2 category.
Bank has the restructuring pipeline of Rs 100 crore for Q1FY2015.
The impaired assets (NPA and restructured advances) of the bank at 5.1% are relatively lower, while bank proposes to maintain the impaired asset ratio steady in FY2015.
The bank opened 153 branches in FY2014, of which 60 were in semi urban areas and 58 in rural areas. Total number of branches increased to 1512 at end March 2014. Total number of ATMs reached 1528 at end March 2014.
Bank proposes to open 188 branches in FY2014, while the semi-urban and rural areas will continue to be focus areas for branch expansion.
Bank recruited total 1736 employees across all cadres in FY2014. The total staff strength stood at 12822 at end March 2014.
Bank has used about Rs 70.6 crore from floating provision buffer for specific loan losses in Q4FY2014 in line with RBI relaxation allowing banks to use 33% of the provision buffer.
Bank has targeted the business growth of 19% in FY2014 to be driven 19% growth each for advances and deposits.
The CD ratio of the bank stands at around 66%, while bank proposes to improve it to the ideal level of 71-72%.
Banks CRAR-Tier I ratio stands at comfortable level of 8.12%, so there is no immediate pressure on capital raising. However, bank sees headroom of Tier II capital raising.