Expect 12% loan growth in FY22, 100% CD ratio by March-end: Prashant Kumar, MD & CEO, Yes Bank

We had set a target for recovery of Rs 5,000 crore in the current financial year.

By Ankur Mishra

Yes Bank is expecting a loan growth of 12% in the next financial year (FY22). In an interview with Ankur Mishra, managing director and chief executive officer Prashant Kumar says the bank is aiming to reach a credit/deposit (CD) ratio of 100% in the current fiscal. Excerpts:

What is your loan growth target for the current financial year?

There is no loan growth target for FY21. However, we are expecting a loan growth of 12% in the next financial year (FY22). In the current fiscal, we are aiming to reach a credit deposit (CD) ratio of 100%. Till December end, the CD ratio was 116%. From the balance sheet management perspective, it is important to reach 100% CD ratio. That, we would be able to achieve by March-end.

What gives you confidence for 12% credit growth in FY22?

For loan growth, there are few things which matter. First one is the available opportunity in the system. The second one is your preparedness. The preparedness comes from the balance sheet side, and competency. So, we are expecting Covid-19 impact to come down, and from the next year opportunities will be there. On the liquidity side also, we are quite comfortable now. We have already built up our teams to take care of the requirement on all the three sides – retail, MSME and corporate. So, we are confident on the credit growth, unless there is some adversity in the environment.

By when do you see advances and deposits at the levels of pre-reconstruction period?

The levels depend on where you would like to compare. The retail deposit build-up takes time. So, it may happen somewhere at the end of the financial year 2022 (FY22). On the loan side, we are a bit cautious on not going for a very aggressive growth. Because, if you go for an aggressive growth, sometimes, you may land in trouble as far as quality is concerned. We will be watching the environment very closely and we would want to grow in line with the market.

Your proforma gross non-performing assets (NPAs) are close to 20%. Do your suspect the asset quality to deteriorate further?

We are at the peak of it. Most of the things have happened because of Covid-19, and now there is an improvement. There are certain indicators for it. Collection efficiency is now at 96%, as against pre-Covid level of 97%. The cheque bounce rate, which was normally at 7-8%, rose to 18% during Covid, and is now at 9%. So, we believe it is at peak and from now on there will be an improvement.

What is your road map for the recovery process?

We had set a target for recovery of Rs 5,000 crore in the current financial year. And, we have already recovered close to Rs 3,000 crore. During the December quarter, we were able to do a cash recovery of Rs 1,512 crore. So, I believe we should be able to achieve our target by the end of the current financial year. In the next financial year, we would want to do better than the current financial year.

What is your strategy for the March quarter?

Our strategy in this financial year was more on recovering bad loans, opening new current account savings account (CASA) and disbursements on the loan side. The disbursement continues to happen. So, we are absolutely on track. We have decided to focus more on retail and MSME (micro, small and medium enterprises) than corporate. In term of deposits, we are adding new customers on the CASA side. The target is to add at least one lakh customers every month. We added 85,000 customers in December.

What is your outlook on net interest margins (NIMs)?

I think for the next financial year (FY22), NIMs should remain in the range of 3-3.25%.