Hyderabad: Union Bank of India said it might have to revisit its full-year guidance of net interest margin (NIM) in the middle of the current financial year.
The public sector bank has made an NIM projection of 3.20% in the current financial year. The bank had an NIM of 3.33% in the last fiscal. “There could be a possibility of credit growth coming down if interest rates rise further, putting some pressure on our net interestmargins,” said M.V. Nair, chairman and managing director of Union Bank of
The bank is expecting a credit growth of 22% this year. Union Bank also said that it is yet to take a call on whether to increase its base rate or not. “During this quarter we will take a call,” said Nair.
The Reserve Bank of India (RBI) raised repo rate and reverse repo rates by 25 basis points (bps) on 16 January to contain inflation which is hovering at 9%. The bank is expecting its gross non-performing asset (NPA) to come down to less that 2% in the current fiscal. In the fiscal year ended 31 March 2011, its gross NPA stood at 2.37%.