ICICI Bank’s top executive frontrunner for new MD post?
THRISSUR: It sounded like a ‘Swan Song’ when VG Mathew, the outgoing MD and Chief Executive of South Indian Bank (SIB), lamented about the bad loan pile spawned by the bank’s corporate loan portfolio, especially the large corporate loans of Rs100 crore and above.
He said the focus of the bank in the past few years has been to prune the corporate portfolio, especially the large loans. The corporate business has come down well below the target his team had set for the bank at 30 per cent.
“We are now at around 28 per cent ‘kind of thing’. And if you look at the large corporate portfolio, above Rs100 crore, while it was about Rs11,000 crore in 2014, today, it has come to settle at around Rs 6,500 crore,” he added.
Today, SIB’s gold loan alone is around 12 per cent or Rs7816 crore. The loans under agri, retail and MSME together currently will constitute about 72 per cent of the bank’s loan book.
Mathew acknowledged that he was leaving the bank on September 30 after he completes his second term, as desired by him. To a query whether his successor would be an outsider, he responded in the affirmative without mentioning any names shortlisted by the bank’s board.
New MD & CEO
Businessbenchmark.news, however, had a few weeks back reported that there was unconfirmed news about Murali Ramakrishnan, a senior general manager with ICICI Bank, being the frontrunner for the post.
Referring to the management’s efforts to contain the NPA malaise in the bank, the SIB chief said the corporate portfolio that consumed huge provisioning over the past quarters has now been ‘right-sized’.
He said the corporate portfolio has been a real pain point for the bank and kept the bank’s NPA management team on its toes for the past few years.
Mathew took the opportunity to reassure the shareholders about the bank’s promising prospects going ahead while responding to analysts’ queries on the bank’s future course.
He said tough times are behind SIB, and the bank has been able to build a quality asset base with an improved provision coverage ratio (PCR), achieving which has always been a daunting challenge before the bank.
SIB toyed with a low provision coverage ratio (PCR) for long. With PCR at just 42.2 per cent, Mathew had said very clearly that it needs to be grown to 60 per cent within 18 months.
“So that is why we have done 54 per cent right now. If you have to achieve 60 per cent, then you need to do another 5 per cent or 6 per cent in the next 2 quarters,” he explained. He said it was with this target, the bank has been carrying out generous provisioning in the past few quarters.
“The kind of NPA pressure that we have faced over a period of time is completely getting behind us today,” A relieved Mathew said adding that the bank doesn’t want the large corporate-based or syndicated loans-based growth anymore.
Giving a run-down on the evolution of corporate loan book, Mathew said the bank’s corporate journey started in the year 2010, and continued up to the end of the calendar year 2014.
“So we are talking about some 5 years of significant corporate growth. And it is very, very obvious that a lot of it has become NPA, and we have transferred a whole lot of it into ARC and a whole lot of that was also written down,” he said further.
SIB chief said an analysis of the bad loan history of the bank since 2014 shows that around 75 per cent of the NPAs have come only from the corporate book, especially from the large corporate book.