Total advances grew 6%, driven by personal loan Which compared to covering 4% decline in corporate loan book by 15% and home loan growth by 11%. Home loans now account for 24% of the bank’s domestic advances.
Chairman Dinesh Khara expressed confidence that the bank would sustain the growth trajectory in line with the economic growth which would also drag on the now shrinking corporate loan book. India’s largest lender is expecting 10% growth in its loan book in this financial year at the end of March 2022.
“Capacity utilization is still low at around 60%. Our undivided term loan facilities are around 27%, while 50% of working capital is unutilised. We have got a pipeline of Rs 1.15 lakh crore and we except that the unutilized term loan is Rs 2.25. Lakh Crore will also be utilized as there is very clear visibility of demand. Capacity addition is happening and I expect there will be a significant improvement in capacity utilization by the end of current and next quarter which will help in coming back to corporate credit,” Khara he said.
A sharp drop in provisions also helped the bank increase its net profit. Provisions declined 51% to Rs 2699 crore from Rs 5619 crore a year ago, due to improved debt collection and write back provisions made for Dewan Housing Finance Limited (DHFL).
Slippage declined sharply to just Rs 4176 crore in September 2021 from Rs 15,666 crore in the quarter ended June 2021, as collection efficiency in retail loans improved to 95% after recovery from the devastating effects of the second wave of the pandemic. Happened after.
The net NPA ratio fell to 1.52% from 1.59% a year ago, while the slippage ratio fell sharply to 0.66% from 2.47% in June 2021, resulting in a 51 basis points drop in credit cost year-on-year. One basis point is 0.01 percentage point.
Khara did not give clear guidance on asset quality, but indicated that downside pressure is on.
“There are no major concerns on the asset quality. Our underwriting standards have improved and the collection machinery has also improved,” he said, adding that the bank has made 100% provisioning for its exposure to the bankrupt Credit Group. .
Strong’s retail loan performance and improvement in asset quality also allowed the bank to fully provide Rs 7,418 crore towards changes in family pension rules in one quarter, while the regulator had allowed it to be amortized over five years.