Canara Bank bullish on lending to SHGs: CMD
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Canara Bank is expected to register 18-19% increase in both credit and advances by the next financial year as rates of interest are likely to diminish and overall market response set to perk up.
But, the pressure on some of its performance factors during the existing financial thus far is set to go on in the fourth quarter too.
S Raman, the bank’s chairman and managing director, stated, “We expect a notable expansion in credit offtake during the next financial year. Nothing dramatic is expected in the credit offtake during this quarter.”
For the coming fiscal, Canara Bank anticipates a NIM of around 2.9% from the 2.6% in the end of the third quarterly period.
“We have traditionally been at 2.7-2.8% NIM levels. Even when we say the sentiment is improving, it would not result in an NIM of 3% or more,” he said.
Though there has been a criticism that the Canara Bank’s expansion has decelerated, Raman said the bank, too, was keen on carefully moving forward.
“We didn’t want to be aggressive in moving ahead. Though issues like credit growth, cost of funds and pressure on margins are evaluated regularly, we were keen on asset quality as well. In order to meet certain financial parameters, we did not want to compromise on the asset quality,” he said.
Mr. Raman said the bank has been forcefully acting on deposits in 2011-12 and the credit-deposit (CD) proportion presently stood at around 69%.
“We would like our advances go a bit faster next fiscal than the growth in deposits. Banks with high CD ratio of over 75% would aggressively focus on mobilising deposits. But if I am 69%, I can be a bit more aggressive on the advances side next fiscal. Liquidity is not a major issue,” he said.
The banking institution has been seeing the migration of current and savings account (Casa) deposits to term deposits, owing to the difference in interest rates.
“There is such migration happening. But it is all happening within the bank. The deposits are not going out of the bank,” he said.
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Canara Bank eyes to ameliorate credit growth, NIM next fiscal
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