The Hindu Business Line : Vijaya Bank targets Rs 1-lakh cr biz by 2009

Mr Prakash P. Mallya, Chairman and Managing Director of Vijaya Bank, is all set to improve the bank's visibility and take it to the league of bigger banks.

Mr Mallya, who took charge in April this year, said his team would target a business of Rs 1-lakh crore by March 2009. The bank is aiming to reach total business volume of Rs 60,000 crore by March 2007 and Rs 75,000 crore the following fiscal. And for the Chairman, these targets though `high' in a competitive environment would not be unachievable.

Excerpts from an interview:

Having laid a roadmap, how do you propose to achieve these goals?

The overall credit pick-up (for the industry as a whole) has been slow during the first quarter of the current fiscal, but things are set to improve. Our bank however has surpassed the first quarter targets. Our total business has increased to Rs 46,800 crore in the first quarter, up by Rs 2,100 crore over March 2006.

The annualised credit growth rate is about 28 per cent, and at this rate we should be able to reach a business level of Rs 5,000 crore by September and the targeted volume of Rs 60,000 crore by March 2007. We are aiming at a net profit of not less than Rs 250 crore to Rs 300 crore this fiscal.

Will size matter?

Size does matter in a competitive environment. Consolidation, if it happens, will be a good thing. There are so many regional, rural banks and considering the number of branches in the industry in its entirety, it can be unwieldy. There will be some inherent benefits in consolidation.

How about your bank? Are you considering the inorganic route to grow in size? Have you identified any bank for take over?

We are considering the inorganic route to grow, but not identified any bank yet. Meanwhile, to gain a national footprint, we are planning to strengthen our presence in the northern and western region.

We would like to have a network of 1,000 branches by March 2007 from a level of 924 at present. We have sent our request (for opening of more branches) to the RBI.

About 350 branches have now been brought into the core banking solution platform. We intend to extend it to 500 branches by March 2007 and the entire network by March 2009. Investment in technology has been substantial. We have earmarked Rs 60 crore towards technology investment this year.

We are also planning to open overseas representative offices in Hong Kong, China and West Asia this year. We have sought the RBI's clearance in this regard.

What would be your strategy to tide over competition, sustain and grow...

We should have a proper business mix of corporate, mid-cap accounts, export clientele and retail segments. There is lot of scope for growth in the retail segment, where the risk is spread and comparatively higher yield. With the hardening of interest rates, the BPLR and SPLR gap has narrowed considerably. We will focus on priority sector advances, SMEs and retail lending.

How would you rate your preparedness for Basel II...

I am confident that by March 2007, we will be ready to face the Basel II norms. We have engaged ICRA to do a research and since MIS is crucial, we have, on an experimental basis, run it in a few branches in Bangalore. Our tier-II bonds issue for Rs 250 crore is slated to open on July 20. Priced at 9.25 per cent, this capex is expected to augment our capital base and strengthen our long-term resource requirement. We are also planning to come out with upper tier II of about Rs 700 crore within the next three months. Such steps would strengthen the bank's CAR.

What about recoveries?

We have done reasonably well on the recovery front. Our gross NPA has fallen from Rs 542 crore to about Rs 525 crore at present. Cash recovery alone stood at Rs 205 crore last year. During the first quarter of the current fiscal, we managed to recover Rs 62 crore comprising both cash recovery and account upgradation.

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