The Hindu Business Line : Syndicate Bank net up 11% on better yield on loans

Home Page - Public Offer
Money & Banking - Financial Performance
Corporate Results - Public Sector Banks
Syndicate Bank net up 11% on better yield on loans

Plans $125-m MTN issue and follow-on public issue

G.R.N. Somashekar

To push asset growth: Mr C.P. Swarnkar (left), CMD, Syndicate Bank, and Mr George Joseph, Executive Director, at a press conference in Bangalore on Friday. –

Our Bureau

Bangalore, Oct. 26 Public Sector Syndicate Bank plans to raise $125 million through a global medium term note (MTN) issue. The bank also has a proposal to make follow-on equity issue of 8 crore shares this financial year, for which it has already obtained approval from the shareholders.

Syndicate Bank Chairman and Managing Director, Mr C.P. Swarnkar, said, “We have sought regulatory and Government approval for raising capital.” Syndicate Bank already has a capital to risk weighted asset ratio of 12.19 per cent. The fresh capital raising was to push up its asset growth during the next financial year, he added.

The MTN proposal, however, comes at a time when international financial markets are overshadowed by the sub-prime crisis. “Pricing is an issue. Last year, spreads were very attractive. This year we will wait for the spreads to become favourable,” he added.

The planned equity offering would dilute Government holding in Syndicate to 57.4 per cent down from the current level of 66.47 per cent. The scrip closed at Rs 87.90, a gain of Rs 2 over the previous day.

The bank reported an 11-per cent increase in net profit for the second quarter (Q2) of the financial year 2007-08 (FY08) to Rs 227.58 crore. The improved net profit was largely on account of improved yield on advances. Yield on advances in Q2 was 10.51 per cent as against 9.28 per cent during the corresponding period of the last financial year.

As a result, the bank was able to defend its net interest income. In Q2, the NII was Rs 489.11 crore, marginally up from Rs 484.58. This was despite advances growth in Q2 being barely Rs 2,500 crore, Mr Swarnkar said.

Domestic advances

Yet despite this tardy credit offtake, Syndicate bank hoped to have domestic advances book of at least Rs 57,000 crore by March end or a 25 per cent growth over the last financial year.

Syndicate bank’s low cost deposit thrust paid dividends in Q2. Mr Swarnkar said, “Core deposits have increased by Rs 10,348 crore.” For the corresponding period of last year it was Rs 3,030 crore. Deposits as on September 30 were Rs 83,849 crore.

More Stories on : Public Offer | Financial Performance | Public Sector Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page