In an interview to CNBC-TV18 K Venkatraman, CEO & MD, Karur Vysya Bank spoke about the current happenings in the bank and the road ahead . He sees no futher compression on the bank's margins, which would stand at 3 percent going forward. Further, their loan growth in this fiscal would be around 25 percent.
Below is an edited transcript of K Venkatraman's interview on CNBC-TV18.
Q: You called a press conference, anything specific that the bank is announcing?
A: We have opened our 500th branch today. Today, we opened a total of 15 branches and 100 ATMs. We had a press meet for that occasion.
Q: What will be the impact on margins in the current quarter? When you last reported, your margin performance improved by 24 bps, are you expecting more?
A: No, I do not expect any further compression, but then margins will remain around 3 percent. We used to be at around 3.3-3.6 and have come down a little, but then it was a conscious decision that we took. If we are going to protect the margins, the problem would have persisted. I have to keep higher interest rates that would not be proper for most of our smaller borrowers and we wanted to avoid that. So we have taken a conscious decision to compress the margin a little as far as this year is concerned.
Q: How would you do in terms of your bad loans? Was there a slight increase in slippages when you last reported numbers?
A: That is a prevailing market condition and because of a slowdown yes, there is still pressure but we do not see very great difficulties in this. We hope we will be in a position to handle this.
Q: What will be the loan growth and the deposit growth this year?
A: Last year we grew by 34 percent. This year we do not propose to grow and may not be in a position to grow to that extent. Around 25 percent loan growth should be possible. Deposit growth is around that or slightly less. Right now the deposit growth is around 23 percent for us.
Q: Ever since the issue of new bank licenses has become imminent and the new bank licensees promoters may get to keep a higher stake of maybe 26 percent, the final rules are not out, there is a growing interest that the new licensees may look for inorganic growth. What would be the position in Karur Vysya Bank, do you plan to merge with some person with deep pockets who could get a new bank license?
A: Existing for 96 years, we would like to maintain our identity going forward. We will not like to be a target for any takeover. For acquiring bank, we may not shy away from an opportunity but we are not actively perusing this as a strategy for growth. Right now the bank is in a transformation process and we would like to put the bank on a stronger wicket rather than looking at the integration issues much high. However, I would not mind looking at a good opportunity for acquiring a bank, if that comes in our way because inorganic growth is not new to our bank. We have been acquiring earlier during our journey of growth but right now we do not have this as an active strategy.
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