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Analyst Meet / AGM - Analyst Meet

Targets business growth of 18% for FY2015

Dena Bank

12-Aug-2014, 05:19

Dena Bank conducted the analyst meet on 11 August 2014 to discuss financial performance for the quarter ended June 2014 and the prospects of the bank. Ashwani Kumar, CMD addressed the meet:

Highlights:

The performance of the bank was mainly impacted by absence of large treasury profit in Q1FY2015 similar to Q1FY2014, additional Rs 30 crore provisions for AS-15 employee provisions and interest income reversals of Rs 48 crore.

Excluding the negative impact of above-mentioned items, the operating profit was 10.7% higher and net profit was rising 13% for Q1FY2015 over Q1FY2014.

Also, the NIM was higher at 2.41% for Q1FY2015 against 2.23% actually recorded for the quarter.

Bank had raised Rs 780 crore of Tier II bonds in Q4FY2014, which contributed to increase in other interest expense for the bank in Q1FY2015.

The staff cost of the bank was also pressured by joining of fresh 1760 staff.

Bank had to make provision of Rs 54.3 crore for fraud of Rs 217.17 crore in its Malabar Hill branch. The provision for fraud is allowed by the Reserve Bank of India to be amortized over four quarters of FY2015 in equal tranche. Meanwhile, the bank expects substantial recovery in fraud case in rest of the year.

The fresh slippages of advances to NPA surged in Q1FY2015 to Rs 674 crore from Rs 408 crore in Q1FY2014. The fresh slippages of Rs 500 crore were mainly contributed by large accounts.

The account-wise major fresh slippages were Rs 200 crore from Tayal Group, Rs 75 crore from Green Valley Cement and Rs 135 crore to NAFED. Infrastructure sector also witnessed slippages of two accounts.

Bank classified the account of NAFED as NPA in Q1FY2015, instead of going for second restructuring and decided to proceed with the recovery of the account.

Bank has exposure worth Rs 3000 crore in the SMA-I and SMA-II category.

Going forward, bank expects the normal fresh slippage run rate of Rs 400-450 crore.

The outstanding restructured advance book of the bank stood at Rs 7905 crore at end June 2014 up from 7637 crore at end March 2014.

Bank has restructuring pipeline of Rs 350 crore for Q2FY2015 under CDR mechanism. These accounts being the NPA category will be upgraded post restructuring helping to reduce Gross NPAs.

Bank did not conduct any sales of assets to Asset Reconstruction Companies in Q1FY2015, while it has identified about Rs 570 crore of assets for sale to ARCs.

Bank has estimated capital requirement of Rs 1000 crore, while it is considering the issuance of Tier-I bonds.

Bank expects ROA at 0.6% for FY2015.

Bank is targeting the business growth of 18% for FY2015.

Bank proposes to open new 180 branches in FY2015.