The Hindu Business Line : Corpn Bank net up 20 pc on higher interest income

Corporation Bank's net profit increased 20 per cent on a rise in interest income to touch Rs 127.01 crore (Rs 105.6 crore) for the second quarter ended September 30.

The bank trimmed bad assets with the percentage of net Non Performing (NPAs) assets to total assets improving to 0.48 per cent (0.98 per cent). Provisions, too, were lower at Rs 38.65 crore (Rs 96.01 crore). The bank saw a cash recovery and upgradation of NPAs of Rs 135 crore (Rs 93 crore).

Fall in other income

However, other income fell due to lower fee income and a drop in treasury income. The bank will try to reposition its cash management products, add new features and enter new geographies, said Mr B. Sambamurthy, Chairman and Managing Director, Corporation Bank. "We need to increase volumes to increase fee income," he said. The bank has set a growth target for fee income at 20 per cent by the end of this year.

Yield on advances moved up to 8.69 per cent (8.3 per cent) while cost of deposits rose to 5.02 per cent (4.54 per cent). This includes the interest payout on the Rs 300 crore tier II capital raised in March 2006.

For the six months ended September 30, the Net Interest Margin (NIM) dipped slightly to 3.2 per cent (3.4 per cent). However, volumes have gone up, said Mr Sambamurthy.

Total deposits increased 27.74 per cent to Rs 38,017.4 crore (Rs 29,760.8 crore) and advances by 38.46 per cent to Rs 28,004.62 crore (Rs 20,225.95 crore).

The share of low cost deposits (current account and savings account) to total deposits is around 32 per cent and the bank wants to mark it up to 40 per cent in the next 15 months.

About the gap in deposit and advance growth, Mr Sambamurthy said in absolute terms, cash is available as the deposit base is larger than advances. The bank also has room for raising about Rs 1,200 crore tier II capital, apart from looking at refinance.Agriculture advances grew 38 per cent and education loans grew 36 per cent. Capital adequacy ratio was 13.32 per cent (17.05 per cent).

The scrip ended at Rs 396.80, up 5.1 per cent from the previous close of Rs 377.55 on the BSE on Thursday.

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