Loans recovery, better CASA deposits on Syndicate Bank’s roadmap to profitability

New CEO Mahaptra has set his sights on improving low-cost CASA deposits, redeploying surplus Statutory Liquid Ratio (SLR) into productive assets

Published: 13th January 2019 04:23 AM  |   Last Updated: 13th January 2019 04:25 AM   |  A+A-

Mrutyunjay Mahapatra, MD & CEO, Syndicate Bank

By Express News Service

HYDERABAD: Syndicate Bank has called time on its loss-making. The state-run lender, under its new MD & CEO Mrutyunjay Mahapatra, Saturday revealed a six-month roadmap for its pursuit of profitability — three months to break-even and three to turn profitable. This means that the Bengaluru-based lender would have wiped out red ink from its balance sheet by June. 

What’s unusual though is that this profit-love isn’t pursued on an aggressive balance sheet expansion, but by smoothing out its kinks. First up is loan recovery from accounts that turned toxic. A war-team of 1,500 staff is chasing defaults and is expected to rake in Rs 1,500 crore by June. Besides, Mahaptra has set his sights on improving low-cost CASA deposits, redeploying surplus Statutory Liquid Ratio (SLR) into productive assets and focusing on retail and MSME loans, which all public sector banks are going after. 

“Even if we take a 2-3 per cent shift (increase) in CASA deposits, my profitability will increase by `200 crore,” reasoned Mahapatra, adding, “Good banks have a CASA range of 40-44 per cent.” Syndicate Bank currently has a CASA of 33 per cent, which the bank targets to increase to at least 38 per cent by September 2019. Similarly, the management believes the lender has an excess SLR of 0.5 to 1 per cent in its balance sheet, which it now wants to deploy on productive assets that can fetch better income. When these collective efforts pay off, the bank’s Net Interest Margin (NIM) is expected to be bumped up by at least 25 basis points to be in excess of 2.5 per cent by June. It’s 2.25 per cent currently. 

Speaking to media Saturday, Mahapatra appeared certain that loan recovery efforts will yield and help him reduce the gross and net NPAs. As on September 2018, the bank had 12.9 per cent and 6.8 per cent gross and net NPAs respectively. Mahapatra wants to bring net NPA below 6 per cent by March. 
Meanwhile, Syndicate bank, which recently received Rs 728 crore from the government through preferential allotment of shares, is about to raise up to Rs 500 crore through employee stock purchase scheme.

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