The Hindu Business Line : City Union Bank to raise Rs 40 cr by March

CITY Union Bank Ltd plans to raise Rs 130 crore as tier-II capital in two or three tranches to help it maintain its capital adequacy ratio at the present level of 12 per cent.

The bank plans to raise about Rs 40 crore by March and the rest as and when the money is required, according to Mr S. Balasubramanian, Chairman and Chief Executive Officer, City Union Bank.

He told a press conference here on Monday that the bank was looking at various options, including the recently announced innovative capital instruments.

A press release issued by the bank said that the bank was also looking at raising tier I capital.

For the quarter ended December 31, 2005 the bank's net profit was Rs 12.43 crore compared to Rs 9.86 crore for the same period last year.

The bank's interest income increased to Rs 81.92 crore against Rs 72.39 crore in the corresponding period last year, while net interest income was Rs 35.09 crore against Rs 28.64 crore in the same period.

Total income increased from Rs 75.03 crore to Rs 92.93 crore.

Deposits as on December 31, 2005 grew to Rs 3,324 crore against Rs 2,927 crore on December 31, 2004, while gross advances went up to Rs 2,391 crore from Rs 1,819 crore.

Net non-performing assets were at 2.69 per cent, which the bank hoped to bring below 2 per cent by the end of this financial year.

Gross NPAs were at 5.5 per cent (which in value terms was about Rs 130 crore). Gross NPAs had come down from Rs 175 crore to the present level in a period of 15 months, said Mr N. Kamakodi, General Manager.

Last year, the bank collected around Rs 40 crore of NPAs and in the first nine months of this year, the figure was Rs 18 crore.

Mr Balasubramanian said the bank would end this year with a net worth of Rs 300 crore, which should touch Rs 1,000 crore by 2010.

The bank hoped to increase its business to Rs 10,000 crore by March 31, 2007, by which time it planned to have 175 branches.