Union Bank rules out interest rates hike; expects Net Interest Margin of 3.25%
merisarkar news service New Delhi March 19, 2011
No Interest hike in near future: Nair
Public sector lender Union Bank of India on Friday said it is unlikely to increase its deposit and lending rates in the next one month even as the Reserve Bank has raised key policy rates by 25 basis points.
"Immediate future in about a month time, I don't think interest rates are going up as far as Union Bank is concerned," bank's Chairman and Managing Director M V Nair said here.
In immediate future, the bank is not going to raise both lending and deposit rates, he said after announcing Union Bank of India partnership with Nokia for mobile banking.
Yesterday, RBI hiked its key short-term lending and borrowing rates by 25 basis points each 6.75 percent and 5.75 percent respectively.
On Net Interest Margin (NIM), Nair said that the bank is going to end the current fiscal with the NIM of 3.25 percent and next fiscal it expects 3.10 percent.
"As a matter of fact, our NIM was 2.7, it has gone up to 3.25 percent but the next year our expectations have come down for the reason this year we had certain benefits because deposit cost did not go up substantially. Last 2-3 months we increase deposit rates that would have impact on the next year (NIM)," he said.
Credit growth in the next fiscal for the Union Bank of India is likely to be 25 percent while deposit growth expected to be 22 percent in next fiscal (2011-12).
