Its gross non-performing assets ratio increased to 4.99 per cent as of June 30 as against 4.34 per cent in March and 3.45 per cent in the year-ago period.
The overall provisions rose to Rs 1,425 crore from Rs 500 crore in the year-ago period, majorly on the back of an accelerated provision of Rs 365 crore to drive up its provision coverage levels and Rs 235 crore set aside for COVID-related setbacks.
The bank’s Managing Director and Chief Executive Vishwavir Ahuja said the provisions will take care of all the requirements for the future and added that it would have been in the black if not for the Rs 600 crore of additional money set aside.
The bank, which announced a “transformation” strategy for the future, recognised the provision hit up front as it wanted to get done with the past challenges in a go, he said.
Its overall restructured loans moved up to Rs 1,162 crore in the June quarter from Rs 933 crore in the preceding quarter.
He said the bank will improve from here on and expects to make up for the reverses in the remaining three quarters of the fiscal year. The wholesale book is performing well, and additionally, there was the benefit of loan moratoriums in the year-ago period, he said.
Fresh slippages of Rs 450 crore each came from the microfinance and the credit card portfolios. Ahuja said that the second wave hit loan collections from the micro borrowers’ side resulting in the NPAs while on the credit card front, there was stress from the past which resulted in many accounts slipping.
Microfinance loan collections, which had fallen to 79 per cent at the peak of the second wave, were at 88 per cent as of July, the bank said.
The lender is positive about the outlook on the credit card front as well, stating that as the economy recovers and sufficient activity gets generated, performance will improve from the second half of the fiscal.
The bank will be hit by the ban on Mastercard but is confident of being able to get back to selling cards by mid-September and attain the monthly average of 1 lakh new cards being sold, Ahuja said.
For the reporting quarter, the net interest income declined 7 per cent to Rs 970 crore as the loan book remained flat and the net interest margin narrowed sharply to 4.4 per cent from 4.9 per cent in the year-ago period.
The retail fees helped the other income double to Rs 695 crore for the reporting quarter, he said.
On the credit growth front, Ahuja did not give a target but said the overall activity will lift the disbursements. He, however, acknowledged that while it has headroom to grow on the corporate loans side after the clean-up done last year, lending to well-rated corporates may also be less margin accretive.
Its overall capital adequacy improved to 17.15 per cent from 16.14 per cent in the year-ago period.
The “transformation” strategy focuses on right to win areas like credit cards and microfinance where it has its strengths, focusing on branch banking, growing secured retail loans in two-wheelers, home extensions and gold and scaling up its neo-bank offering customers by three times to over 12 million in three years.
The bank scrip closed 0.78 per cent up at Rs 194.45 a piece on the BSE.