Interview: : Sanjeev K Gupta & V Srinivasan
Axis Bank, which declared its Q1 result on Friday, expects accretion to stressed assets in FY16 to be lower than last year. In a conference call with journalists, Sanjeev K Gupta, executive director (corporate centre) & CFO, and V Srinivasan, executive director-corporate banking, said the bank expects net interest margin to remain above its medium-term guidance. Excerpts:
The net interest margin has remained stable on a sequential basis. What is your guidance on the same?
The net interest margin for the first quarter was at 3.81% and, during the quarter, we took two base rate cuts: 10 basis points one time and another of 20 basis points.
We believe that for the full year, our NIM will be well above our medium term guidance of 3.5%.
Are slippages coming from any particular sector or account? Was there any sale of assets to asset reconstruction companies this quarter?
The NPAs are not coming from any one segment, but from large corporates, SME and retail. It is not one account that has contributed to NPAs, they are spread across businesses and sectors. As far as the sale to ARCs is concerned, we sold a small amount for cash.
What would be your guidance for stressed asset addition and credit costs for this fiscal year?
We had created a stressed asset addition of Rs5,700 crore in FY15 and, this year, we expect accretion to stressed assets to be slightly lower than what we saw the last year. For the full year, the credit cost will be around 80-90 bps.
What is your exposure to power, infrastructure and metals sector?
If your look at the power sector, our exposure is 6.83% of our overall loan book as on June 30, 2015. As far as infrastructure sector is concerned, the exposure would be 7.74%. In the metal and metal products (sector), the exposure would be 5.96%.
What is your guidance on credit growth?
For the full year, we expect a credit growth of 18-20% growth.
Retail loan growth will be around 25%, SME growth will be around 20% and large corporate credit growth will be in line with the industry growth rate or slightly better than that. It may be roughly around 15-16%.
Have you refinanced any projects under RBI’s 5/25 scheme?
From the time this dispensation has come into effect, we have done one 5/25.
What is your exposure to JP Associates?
We cannot divulge individual exposure details, but as far as the company is concerned, you are aware that this is one group that has divested assets on more than one occasion. As of now, they have been meeting their obligations although with some delay.
