Achieving 15% credit growth should not be a challenge

Tamilnad Mercantile Bank (TMB) is focusing on high-yielding consumption gold loans and low-cost CASA deposits to improve its margins.

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MD & CEO Salee S Nair talks to Narayanan V about the bank's credit growth outlook, deposit mobilisation strategy, and the key focus areas for lending.

Your operating profit was down 12% to ₹412.26 crore in the first quarter of this fiscal. What led to this drop? This was primarily due to the front-ending of our performance-based incentive which we offer every year. It's typically amortised over four quarters. Last year, we amortised around ₹36-37 crore and accounted for about ₹8.75 crore in the first quarter. TMB is a highly collateralised bank—our unsecured portfolio is just ₹125 crore out of a ₹45,000-crore loan book.

Given our very low credit cost, we had the confidence to book the entire ₹41.74-crore incentive in one go in Q1. This impacted our operating profit, and as a result, net profit rose by 6%. That said, we still posted our highest-ever quarterly net profit of ₹304.89 crore, thanks to lower slippages (of only ₹22 crore) and provisioning requirement.

You had guided for a 15% credit growth in FY26, but Q1 growth came in at only 10%.