Ahead of its second quarter result, Bank of Baroda's margins are expected to stay at levels seen in the first quarter, said Mallya. He also sees credit growth of 19% in FY13. Besides, Mallya feels restructured assets could be higher in the current fiscal year.
Here is the edited transcript of the interview on CNBC-TV18.
Q: Starting with the problems of asset quality, even for a good bank like yours, we could see that in the last quarter the net and gross NPAs rising, how long will this problem last? Do you see it remaining bad for the next two quarters as well?
A: As far as the trend is concerned, because of the overall economic slowdown there have been pains for overall asset quality. Therefore, we are not totally insulated from asset quality problems. Definitely, I would say our performance has been far better in terms of protecting the asset quality, in terms of managing the delinquencies at reasonably low levels. It is all because the asset quality has been quite strong and therefore, that is the guidance we have given in the past.
Q: In the first quarter your gross NPLs went up nearly 28 bps and net went up over 11 bps. Will this be prorate increase?
A: I will not be able to comment as far as the current quarter is concerned. I am only talking about trends for the industry and for the bank as a whole. I would only say that when one sees an economic slowdown, it is but natural that the asset quality will be a little stressed.
We have experienced it in the system in the recent past and maybe it would take another 9-12 months before we are able to rollback in terms of substantial improvement in the asset quality or maybe arresting the delinquencies substantially. But, I am sure that this is going to happen because we have seen signs of positive sentiments in the recent past and therefore, growth of the economy should accelerate from now on.
Q: By 9-10 months do you mean we could see pains for 2-3 quarters going forward?
A: Yes, it could possibly be for 2-3 quarters. One cannot say, it could be bank specific also but, overall the pains will continue for some time.
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