Private sector lender Federal Bank has said it will continue to grow its gold loan-book by up to 18 per cent during 2013-14 in spite of recent fall in prices of the yellow metal.
"We will remain cautious, but will continue to lend to the segment and achieve a growth of 15-18 per cent," Managing Director Shyam Srinivasan told PTI over the weekend.
The Kerala-headquartered bank's gold loan portfolio stood at over Rs 6,300 crore as of March 31, 2013.
When asked about the action taken by the bank following the recent fall in gold prices, Srinivasan said, "We have reduced the LTVs (Loan to Value raito)...anyways, it was never above 70 per cent."
After touching a high of over Rs 33,000 per 10 gm, gold prices came down to Rs 25,500 levels over the last fortnight.
On remittances front, a mainstay for the bank, Srinivasan said they jumped 36 per cent to Rs 27,000 crore during FY13. He expects the non-resident deposits to grow by 30-35 per cent during FY14.
Federal Bank posted a 6.59 per cent dip in its net profit to Rs 221.94 crore in the March quarter, mainly due to 2 per cent dip in the core interest income, which came in at Rs 479.76 crore, and a fall in the net interest margin.
Srinivasan said the profit also dipped due to a one-off credit provision reversal during the year-ago period.
The bank's net interest margin was squeezed by over 0.40 per cent to 3.37 per cent, against 3.79 per cent in the year-ago period.
Srinivasan attributed the fall to high cost of deposits and the bank's strategy to go for the low margin but safer assets during the time of the economic difficulties.
On the asset quality front, its gross non-performing assets ratio increased to 3.44 per cent from the 3.35 per cent in the quarter ago period, with a slippage of Rs 357 crore during the March quarter.
Srinivasan said there is no lumpy account among the slippages, but large corporates (Rs 200 crore) and SMEs (Rs 99 crore) accounted for the highest.
It restructured Rs 212 crore of assets during the quarter to take the total restructured book to around Rs 1,800 crore.
A change in regulatory stance led to increase in provisions to Rs 98.18 crore from the year-ago's Rs 15.51 cr.
The bank does not intend to increase its interest rate offering on the savings bank offering, unlike some of its more aggressive peers from private space, Srinivasan said.
Federal Bank will also not go for a capital raising during the fiscal as the total capital adequacy of 14.73 per cent is a very comfortable one, he said.