We're substantially derisked: Bhandari

Centurion Bank has cleaned up the balance sheet by setting aside adequate provisions for bad loans and by significant capital infusion, managing director Shailendra Bhandari said Wednesday.

"With 80 per cent retail (assets), we are a substantially de-risked bank with substantially higher earning potential," he said. "Our aim is to become a quality bank.".

The bank has made provisions of Rs 425 crore for non-performing assets over the last four years, including Rs 117 crore in 2003-04 (April-March).

"With this, we have got rid of our legacy assets and our provisioning cover at 69 per cent (for 2003-04) of gross NPAs is much better than industry average," Bhandari said. "We have completed all the provisioning for our legacy assets."

He said Centurion's net NPAs by March (2005) will be below 3 per cent.

"We moved over to the 90-day norm for NPAs well in advance of RBI's (Reserve Bank of India) requirement," Bhandari said.

Provisioning for the two-wheeler loans portfolio is 2-3 times over RBI's norms, he added. The bank's NPAs in the two-wheeler loan segment stand at less than 2 per cent.

For 2003-04, Centurion Bank's net NPAs stood at 4.3 per cent of net advances, down from 7.5 per cent in the previous year.

Bhandari said 80 per cent of the bank's core assets were in the retail segment and hence, incremental NPAs will be less. He said the bank is poised for rapid retail growth. "In retail, we are looking at home loans, credit cards, as well as the mortgage segment," he said.

"We are almost definitely going to enter the home loan segment by this financial year. We are just waiting for the right time," Bhandari said.

The bank may initially provide home loans at selective branches.

"We are actually working out a very detailed strategy for this. We want more home loan customers and not securitised paper as a larger customer base will give us opportunity to cross-sell other products," he said.

Currently, retail assets comprise 80% of the bank's total advances.

In April-June, the first quarter of 2004-05, Centurion Bank's total retail assets including financing for two-wheelers, commercial vehicles, and construction equipment grew at an annualised rate of over 50%.

In 2003-04, growth in total retail assets was 47%. The bank plans to offer wealth management services and will announce a partner for bancassurance soon.

"The tie-up for bancassurance will be announced by this month-end and it will be with a private sector company," Bhandari said.