The Federal Bank aims to increase the market share of the current deposit account and the savings account (CASA) to protect the net interest margin, as the Indian bank is likely to start an interest rate reduction cycle. Lender’s.
Private lenders will also focus on increasing the share of high-yield companies such as commercial vehicles and MSME lending to maintain NIM at current levels.
“As assets are relicated more quickly (than assets), there is a delay in the benefits of low cost, so the reduced reporate will affect NIM. We are a company that has the advantage of commercial vehicles, MSME loans, etc. “We aim to increase the share of our high-yield business,” Dugar said.
“In the medium term, we hope to protect NIM.”
Like other private lenders, federal banks have also witnessed a reduction in profit margins. That NIM is contracted slightly to 3.11% from 3.12% in the second quarter of the third quarter, at 3.19% in the same quarter of the previous fiscal year. Most private banks have witnessed NIM contraction in the third quarter of the current fiscal year due to increased stress on unsecured loans.
Banks aim to mobilize CASA deposits that help keep the costs of funds down. “On the deposit side, we want to reduce the cost of funds by changing the mix by focusing on CA (current account) and SA (savings account). A little lower for our banks The CA wants to gradually raise it,” Dugar says.
“The cost of our deposits is increasing, but it reflects the structural liquidity challenges of the banking system. We believe we can contain it to some extent,” he said. 。
The bank also witnessed the higher stress of unsecured loans in the third quarter, including credit cards, personal loans and microfinance loans. However, unsecured loans in the total loan book are not important, and are currently around 5%. The bank will carefully grow its MFI loan books, he said.
Private banks are increasing sliding and increasing the stress of unsecured loans in the third quarter. An increase in slippage referring to the standard loans being converted to bad debts was observed primarily in retail unsecured portfolios, particularly credit cards, personal loans and microfinance loans.
