Net interest income (NII), or the difference between the interest earned on loans and that paid for deposits, increased by 3% to ₹11,101 crore, mainly as interest expenses increased. Operating expenses also increased 12%, primarily on higher employee costs, denting profits.
Provisions decreased 72% year-on-year to ₹666 crore in December 2023 largely on improved asset quality. The net NPA ratio dropped to 0.70% in December 2023 from 0.99% a year ago.
CEO Debadatta Chand said the bank continues to expect a 14-16% growth in loans led by retail.
“This time, we reduced bulk and term deposits to arrest the fall in our net interest margins (NIMs) and some impact was also seen on our loan book. But we still maintain our loan growth and expect NIM to be in the 3.15% plus-minus 5 basis point range,” Chand said.
Net interest margin (NIM), or the difference between the yield on advances and the rate paid for deposits, fell to 3.10% from 3.37% a year earlier, impacting profits. NIM was higher than the 3.07% reported in September. The bank reduced bulk deposits by 7% compared to September and raised ₹7,500 crore from the bond market last quarter.Even in the current quarter, the bank expects to raise ₹7,500 crore from the bond market, out of which it has raised ₹5,000 crore by selling infrastructure bonds as it tries to keep a lid over the cost of funds which have increased to 5% from 4.11% a year earlier.Chand said that deposit rates are near their peak and the bank expects deposit growth to pick up from here to 12% from the 8% year-on-year growth seen in the December quarter.
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