Dena Bank to pare bad loans by 60%

Dena Bank has ambitious plans to reduce its net non-performing assets (NPAs) by 60 per cent to 2.0 per cent by end-March 2006, from 4.90 per cent at the end of June 2005.

"The bank is confident of reducing its NPAs to a comfortable level soon," chairman M V Nair told reporters today.

The bank plans to cut down on NPAs through increased recoveries, prudent provisioning and selling a greater amount to the Asset Reconstruction Company India.

Dena Bank has managed to reduce its net NPAs to 5.23 per cent at end-March 2005 from 9.40 per cent a year ago.

Banks have been successful in bringing down their net NPAs mostly through provisioning. Public sector banks have reduced their net NPAs mostly by provisioning of over Rs 70,000 crore during the last three years.

During last three years, total NPA provisions have been in excess of the collective net profit of PSBs.

Nair said the bank was also endeavouring to increase its net interest margin in 2005-06 to 3.20 from 3.08 in 2004-05 by reducing deposit costs.

The bank's average cost of deposits has dropped by about 95 basis points to 4.83 per cent in the quarter ended June 2005.