Indian Bank aims to maintain 3.4% NIM, targetting Rs 7,000-8,000 crore recoveries, digital transformation, and talent development.
Public sector lender Indian Bank is targeting to maintain 3.4 per cent net interest margin (NIM) in the current financial year, MD & CEO SL Jain toldbusinessline.
“When interest rates decline, loans linked to external benchmark reprice immediately, lowering interest income…In my book, around 55-60 per book is linked to marginal cost of funds based lending rate (MCLR), enabling us to hedge better,” he said.
“Secondly, we have built a good investment portfolio where yields are more than 7 per cent. Further, when interest rates come down, deposit price will also come down. A combination of these factors will help us prevent our NIM at 3.4 per cent, plus or minus 10-15 basis points,”
Recoveries
Further, the bank is targeting ₹7,000 crore-₹8,000 crore of recoveries in the current fiscal, the MD said, adding that slippages will be lower than annual recoveries.
“From the last 2-3 years, my recoveries are higher than slippages. Last time in FY24, we stated we will recover ₹8,000 crore of loans, and we recovered ₹8,500 crore. This year, due to lower base, we gave guidance of ₹7,000 crore-₹8,000 crore of recoveries and we have already recovered ₹3,958 crore in H1FY25, so we are on path to achieve guidance,” he added.
Digital turnaround
During his term as Indian Bank chief, Jain said the bank has been able to improve its digital infrastructure, generating ₹1.8 lakh crore of digital business in the last three years and increasing mobile banking customers from 50 lakh to 1.81 crore.
“We reached these customers through a newly built analytics centre of excellence. Based on AI and ML, we offer tailor made product to different customers. These journeys are helping build operational efficiencies at the bank, reducing turn around time, and it is enabling bank to add more customers,” he said.
In terms of talent, the bank started with scientific target setting for employees, wherein KRA directory is directly linked with core banking system.
“This enabled employees to get their performance score on a monthly basis and understand how their competitors are performing, and what one should do to get a better rating. This built transparent culture and productivity of employees has also risen,” he said.
Improving customer service
“We also strived to improve customer service. This helped us deliver consistent earnings over last 13-14 quarters. We have achieved good quality growth and remain on a profitable path. Our margin which was close to 2.8 per cent is now close to 3.5 per cent and asset quality is better. Moreover, our net profit has increased many-folds post merger of Allahabad Bank with Indian Bank,” Jain said.
Jain said his successor, Binod Kumar, currently ED at Punjab National Bank (PNB), must accept the changes at the bank after taking charge on January 1. “First thing is to address the change. Change is happening. Innovate and learn from earlier mistakes. And naturally grow in line with the economy,” he said.