SBBJ may see drop in net interest margin at 3.25% in FY14: MD
New Delhi: State Bank of Bikaner and Jaipur (SBBJ) may witness a drop in its net interest margin to 3.25 percent in 2013-14, Managing Director B Sriram said on Monday.
"The net interest margin (NIM) will be slightly depressed this year because we were at about 3.62 percent last year, it has come down to 3.5 percent in June quarter. This year we are expecting around 3.25 percent, but it's much higher than what other banks are having," Sriram said on the sidelines of a PHD chamber event here.
NIM is the difference between the interest earned and expended.
Sriram said the bank will be focusing on the retail segment this fiscal to drive growth.
"(In the) Current year, we are focusing on the retail only. Agriculture is one of the priority area, we are already above 18 percent target lending. We will continue to be around that level. Target towards priority sector lending will be met. Focus will be more on retail segment, medium enterprises," he said.
Earlier during the event, he said that high interest rates and rising NPAs (non-performing assets) are worrying factors for the banks and it will be difficult to bring it down.
"Interest rate, rupee rate are the major areas of worry. Interest rates are on the higher side. Liquidity situation is tight. NPAs in excess of 4-6 percent...Assets are not giving returns. Most NPAs included with restructured loans are in the order of 12 percent for the banks. To bring down interest rate is going to be difficult," he said.'
Despite rising bad loans (or NPAs) in the banking sector, SBBJ's NPAs in the first quarter ended June 2013 dropped by 4 basis points to 2.27 percent.
On asked about RBI's possible action in the mid-quarter policy review later this week, he said: "At the moment I don't think RBI will be changing too much of the rates, they will wait and watch."
The recent measures taken by the RBI have led to some appreciation of the rupee and probably the focus is on controlling the volatility in the rupee, he said.
"Once that is done and once the other parameters fall in place then probably they will go ahead (with the rate cut)," he added.
The Reserve Bank will come out with its mid-quarter policy review under the newly appointed governor Raghuram Rajan on Friday.
In the first policy review of 2013-14 in July, RBI had kept the key interest rates unchanged, disappointing bankers who had said they may have no choice but to hike rates after a month to the detriment of retail borrowers and industry.