State Bank of Mysore is hopeful of attaining a 33 per cent current account/savings account (Casa) ratio, with a credit growth rate of 19 per cent in the current financial year.
“Casa was around 31 per cent of our overall deposit during last fiscal. We have been aggressively pushing to grow in this segment and are hopeful of a 33 per cent Casa ratio by the end of this financial year,” said Dilip Mavinkurve, managing director.
The Casa deposit ratio is a crucial indicator of a bank’s profitability, as a high Casa ratio slashes the cost of funding for a bank and contributes to its bottom line.
However, the bank has fixed a credit growth rate target of 19 per cent, slightly lower than the Reserve Bank of India target of 20 per cent for 2010-11.
“As of now, credit uptake is yet to pick up in most of the verticals. The uptick is only seen in the retail lending segment for our bank,” he said.
Though 16 per cent of the total credit portfolio is for the infrastructure sector, there is no possibility of an asset-liability mismatch for the lender, he added.
“Asset quality of the bank is fairly sound, with a gross non-performing asset (NPA) ratio of less than two per cent and net NPA of one per cent by March 2010. In value terms, our total NPA was pegged at Rs 600 crore. With a net profit of Rs 445 crore in FY10, we have the leverage to grow faster,” Mavinkurve told Business Standard.
However, RBI’s recent guideline to calculate interest on a daily basis on savings accounts is expected to put pressure on bank’s net interest margin this year.
“Though our NIM (net interest margin, the ratio of net interest income to average interest-earnings assets) stood at 3.1 per cent for FY10, it may dip to three per cent during the current fiscal on account of higher disbursement of interest on savings accounts,” he said.
Referring to capital adequacy ratio, Mavinkurve said the bank had a comfortable tier-I capital ratio of 12.4 by the end of 2009-10.
“After the proposed rights issue, our tier-I capital will be more than 13 per cent,” he added.
Earlier, the bank’s board of directors had approved raising Rs 600 crore through a rights issue in November 2010 and it is awaiting RBI approval for this.
About the proposed merger of SBM with parent State Bank of India, he said, “There is no tangible time line for the proposed merger and it may start after the completion of merger formalities of State Bank of Indore with State Bank of India.”
State Bank of India, which holds a 98 per cent stake in State Bank of Indore, recently received RBI’s nod for the merger.
If the merger sails through, then it will be the second such merger of a SBI subsidiary after the bank had merged State Bank of Saurashtra with itself in 2008.
