Dr. V.A Joseph, Managing Director & CEO, South Indian Bank, is M.Com from Kerala University. He is a Master in Personnel Management and LLB from Pune University. He possesses a PhD degree from the Pune University. Dr. Joseph joined as Trainee Officer in Syndicate Bank in June 1972 and worked as Branch Manager at Trivandrum, Ernakulam and Pune for 15 years. He held the post of Principal of Staff Training College, Udipi, Karnataka for two years and was also Head of Human Resource Development, Head Office (Manipal). He was the Regional Manager of Goa as well, besides being the Deputy General Manager of Delhi and Ahmedabad Zones. Before joining South Indian Bank, Dr. Joseph was the General Manager of Syndicate Bank, Mumbai Zone overseeing the operations of the bank in the states of Maharashtra, Gujarat, Goa and Chattisgarh.
South Indian Bank came into being during the Swadeshi movement. SIB, a private sector bank, was incorporated at Thrissur in Kerala, South India. The establishment of the bank was the fulfillment of the dreams of a group of enterprising men who joined together at Thrissur, a major town (now known as the Cultural Capital of Kerala), in the erstwhile State of Cochin to provide for the people a safe, efficient and service oriented repository of savings of the community on one hand and to free the business community from the clutches of greedy money lenders on the other by providing need based credit at reasonable rates of interest. Translating the vision of the founding fathers as its corporate mission, the bank has during its long sojourn been able to project itself as a vibrant, fast growing, service oriented and trend setting financial intermediary. The rebranding exercise of bank has created greater brand re-call and awareness among customers.
Speaking with Jasmine Kohli of IIFL, Dr. V.A Joseph say’s “SIB has no immediate plans to raise capital, as the banks Capital Adequacy Ratio (CAR) is in the comfortable zone”.
Tell us about you ‘strategic plan – ‘Vision 2013’? Have you identified any other thrust areas for the future?
Our ‘Vision 2013’ envisages a total business of Rs. 750bn, 750 branches, an employee headcount of 7,500 and to attain ROA of 1.2% by FY13. We are poised to achieve Rs. 480bn of business this year. By March 2013, we hope to achieve Rs. 750bn.
The bank has a roadmap for expanding its network to 750 branches by 2013 with 60% of the new branches to be opened in non–south regions of India. We are planning to have 640 branches by the end of this year. Last year we had 580, first half we had opened 30 which came to 610, and another 30 more branches are being opened by January end which will take the total number of branches to 640. We are planning to add another 55 branches which will come to 695 in 2012 and another 55 branches in 2012-13, which will take it to 750 branches by 2013. These are very moderate targets and we are confident to achieve this in normal course.
Future thrust area for our bank firstly would be our business target; secondly on the NPA front, we always want to ensure that we don’t exceed the net NPA above 0.50 % and thirdly, our provisioning coverage ratio should be above 70%, all with a consistent growth in profit.
Tell us about your recent tie up with Visa to launch debit card. How many customers to plan to enroll for this? What growth do you see in this segment?
Earlier, we had it with Master Card but people wanted to use Visa at many places. Anybody having Master or Visa can use our ATMS. Immediately, we are looking at a number of 4 lakh cards by March 2011.
What is your take on plastic money? These days’ credit card payments are on decline, please comment.
Credit card usage has come down drastically, so the ATM cards i.e Debit cards are
being used a lot these days for shopping. We have launched VISA card for shopping and expect this number to grow.
Any plans to raise capital? What is your CAR? And Tier I capital ratio?
No, we do not have any immediate plans to raise capital. Our Capital Adequacy Ratio (CAR) as on September is 15.86% and till March 31 we are very comfortable and in even after March this year’s profit seems to show that we may not need to raise capital. After March, we may assess the positions and take a decision then. Tier I Capital ratio is 13.08% and for the coming quarter it should be at least 13% minimum.
What is your take on liquidity situation of the country? What measures do you expect the RBI to take?
We hope RBI may take some steps to ease the liquidity. RBI has also said that government expenditure should be increased, so tightness may come down next quarter.
Several banks have hiked deposit and lending rates lately. Have you also announced any revision in deposit or lending rates?
We only introduced a product called ‘SIB 500’, for just one month. The Scheme started from Dec1 and will close on Dec 30. The scheme is a 500 days deposit product. On Base Rate, our ALCO will meet during this week and take a call.
Please comment on your growth in credit offtake and deposit mobilization fronts for this quarter.
Credit offtake has been really good. We have grown at 25%. We had targeted 25% advance growth. But the demand for credit is good now and if the same trend continues then we may touch 30%.
Regarding deposits, in the first half we touched Rs.250bn and plan to touch Rs.280bn this fiscal and we believe that we would be able to touch our target comfortably. Deposits have also been growing at 22% so far yoy. We hope to cross 25% by March. This quarter alone (i.e Q3) growth expected is around 7% over September.
Brief us about your financials for Q2/H1FY11 results? Reasons for this growth? Guidance for next quarter?
For Q2/H1FY11 our NII exhibited a 20% YoY growth at Rs 1.97bn and our net profit exhibited a 6% YoY growth at Rs 770mn and we had negligible accretion to NPAs during the quarter.
We have for 2010-11 targeted a net profit of Rs. 2.8bn, out of which Rs 1.35bn net profit has already been reached by Sept 30, with this growth we think Rs 2.8bn target should not be a problem. Last year it was Rs 2.34 bn and this year the target is Rs. 2.8bn.
As on September 30, our Agriculture loan book was Rs 29.54bn, SME was at Rs 20.69bn, Retail was Rs 88.44bn and CRE was Rs 1.17bn as against June 30 Agri was Rs 26.22bn, SME was Rs 20.25bn, Retail was Rs 85.03bn and CRE was Rs 1.76bn, respectively.
What growth are you targeting this year in new loans?
The net credit as on March 31, 2010 stands at Rs. 159.70bn and we have a target of Rs. 200bn for March 31, 2011. As on September 30, we crossed the Rs.180bn mark. So the target of Rs. 200bn appears comfortable.
The CD ratio is lower in Kerala, What is your take on this? What is Credit-Deposit Ratio for SIB?
Most of the banks in Kerala have their NRI deposits; NRIs don’t come and avail loan, so if we calculate CD Ratio by excluding the NRI deposits then it is around 65-70%. Usually, when we calculate CD Ratio, then we take NRI deposit also into account.
The CD ratio for Kerala as on June 30 was 43.49% and has registered an increase and stand at 45.88% as on September 30 and further has increased to 46.01% on November 30.
For the Bank as whole the CD Ratio is 74%. In the future we want to keep it above 70% but not above 75%. We will maintain the CD Ratio in range of 72%-75%.
How much do you expect the Opex to be in this quarter?
We are trying to maintain our cost-income ratio at 45% and we are trying to control our controllable expenditure. There are a few expenditure items which cannot be controlled per se; while opening 60 new branches the expenditure can go up and with the implementation of pension option we cannot much reduce the Opex, this was one reason for the increased Opex.
However, the increased number of branches, which we are opening at around 50-60 branch every year, is going to add to our business in the coming years. This is a long term strategy and will be beneficial for the banks growth in the long term.
Brief us on your expansion plans. With reference to Gold Loans? What is the rate of interest in Gold loan?
Gold Loan we are expanding in a big way, the NPAs are very minimal. The margins are also reasonable. We plan to go more aggressively for Gold loan expansion. As on September 30 it was at Rs 33.33bn and has registered an increase as compared to, June 30 when the Gold Loans were at Rs 29.37bn. Going forward we have a target of Rs 37.5bn for this fiscal.
The rate of interest varies for Agriculture it is around 9% and for other it is 12%.
What is the amount of loans you have restructured? Which sectors were you seeing most of the restructuring? Any slippages seen by the bank?
The sectors, which witnessed the restructuring were mainly Textile and Construction and aggregate restructured loans was Rs.4.2bn. Out of the above, loans of about Rs 340mn are outstanding as NPA as on September 30.
Corporate Governance has become a much talked about subject. What are your views on the same?
Corporate governance is indeed very important and a must, especially as far as the banks are concerned, for the banks deal with the people’s money. Corporate Governance indicates better transparency and fair practices, thus financial sector must comply with fair and healthy Corporate Governance practices. Corporate Governance is critical for achieving long-term sustainable growth and profitability.
Does the bank have any exposure to the Real Estate?
We are a very conservative bank as to our loan exposure to the stock market and the real estate. We have meager exposure of Rs 1.17bn to the Real Estate as on September 2010, as compared to the Rs. 1.78bn on June 2010.
To what extent does a bank like yours get affected by the on going controversies?
We do not have any exposure to any of the parties as on date.
What is your message to the shareholders?
South Indian Bank is a bank with strong asset quality, business fundamentals and adequate capital position. We have been actively expanding our network in non-south regions to achieve pan-India presence. Through our traditionally warm clientele relation and customer-friendly products, our growth is on projected lines, adding value to the shareholders and other stake holders.