At present, the share of commercial loans (large companies) is close to 55 %. The Jaipur-headquartered bank will now like to bring down this to 45 per cent by March 2013, according to Shiva Kumar, its managing director.

As such, with moderation in economic growth, the demand from corporates (for credit) has already shown substantial drop. “Times have become challenging and difficult,” Kumar said, talking to Business Standard here.

The 1963-founded SBBJ, an associate bank of State Bank of India, expects an 18 % growth in credit for the current financial year. Its advances stood at Rs 44,093 crore at end of last month — up from Rs 41,206 crore for 2010-11.

Kumar said rural and semi-urban areas continue to show robust demand, and would become the thrust sector. For retail business, the bank would push home loans and car loans. “It is not that we will avoid corporate business, but the emphasis will be on retail,” he added.

The bank reported a 13.68 % drop in the net profit at Rs 112.17 crore for the second quarter ended September due to increased provision for non-performing assets. Its net interest income improved by 12.7 per cent — to Rs 477.61 crore. Its net interest margin (NIM) improved to 3.37 % from 3.13 % a year ago.

With a high share of low-cost deposits – current and savings – of 39 per cent, the bank expects to maintain NIM at about 3.37 per cent level for the current financial year. The RBI’s decision to deregulate interest rate on savings deposits would intensify competition amongst banks and put pressure on NIMs, he added.

Referring to a rise in bad loans at the end of September, the boss said the bank’s gross non-performing assets stood at Rs 1,651.98 crore (3.70 %) from Rs 943.26 crore (2.57 %). Keeping in tune with the government directive to public sector banks, SBBJ has recognised the 100 per cent bad loans-based system-generated data. Most of the addition has come from the agriculture sector.

The bank’s provisions and contingencies have now shot up to Rs 159.28 crore from Rs 6.10 crore a year ago, he said. Its capital adequacy ratio under Basel II has improved to 12.75 per cent from 12.29 per cent in September last year.