State Bank of Mysore (SBM) is hopeful that it would attain 33% CASA ratio and 19% growth in its loan book this fiscal.

"Casa was around 31 per cent of our overall deposit during last fiscal. We have been aggressively pushing to grow in this segment and are hopeful of a 33 per cent Casa ratio by the end of this financial year," said managing director, Dilip Mavinkurve.

CASA is a vital indicator of profitability of a bank. This is because an increase in CASA ratio reduces the cost of funds for a bank and thus strengthens its bottom line (net profit).

"As of now, credit uptake is yet to pick up in most of the verticals. The uptick is only seen in the retail lending segment for our bank," he said.

"Asset quality of the bank is fairly sound, with a gross non-performing asset (NPA) ratio of less than two per cent and net NPA of one per cent by March 2010. In value terms, our total NPA was pegged at Rs 600 crore. With a net profit of Rs 445 crore in FY10, we have the leverage to grow faster," Mavinkurve added.

However, RBI's directive to banks asking them to calculate interest on savings account on a daily basis would hurt the net interest margin (NIM) of banks.

"Though our NIM (net interest margin, the ratio of net interest income to average interest-earnings assets) stood at 3.1 per cent for FY10, it may dip to three per cent during the current fiscal on account of higher disbursement of interest on savings accounts," he said.

Talking about the issue of its merger with lead bank, SBI, he said, "There is no tangible time line for the proposed merger and it may start after the completion of merger formalities of State Bank of Indore with State Bank of India."

The merger of SBI and State Bank of Indore has finally received RBI approval.