The Hindu Business Line : Bharat Overseas net goes up 30 pc

BHARAT Overseas Bank Ltd has reported a net profit of Rs 22.75 crore for the year 2001-02, as against Rs 17.50 crore for the previous year - a growth of 30 per cent.

This was despite higher provisioning. Provisions against doubtful loans were Rs 11 crore, up from Rs 7 crore previously. With the increased provisioning, 50 per cent of the bank's NPAs are provided for.

The bank has declared a dividend of 15 per cent, which will go to the seven other scheduled commercial banks that are BOBL's promoters. The dividend payout works out to roughly 10 per cent of the net profit.

Thanks to the retained profits, the bank's capital adequacy ratio has risen to 15.09 per cent from 14.43 per cent as at the end of the previous financial year.

At a press conference here, BOBL's Chairman, Mr G. Krishna Murthy, said that the bank had recently mandated SBI Capital Markets to study the capital structure of BOBL, in relation to the bank's long-term vision document. SBI Caps, which will complete its study in a months' time, is expected to advise the bank on how to strengthen the capital base.

Although BOBL's capital adequacy ratio is today well above the norm of nine per cent, the bank feels the need to strengthen its capital structure in view of its growth plans.

Today, BOBL has net owned funds (NOF) of Rs 123.03 crore (up 23 per cent over last year). It has plans to open one or more overseas branches once the NOF crosses Rs 200 crore.

Besides, it has plans to expand its branch network. Having got the RBI approval, it intends to open four new branches at Surat, Nellore, Kolkata and Chennai this year. But once its Rs 18-crore IT project is over, the bank has plans for further expansion of its branch network.

The investment in IT, new branches and the envisaged growth in advances require adequate capital, hence the mandate to SBI Caps.

Last year, BOBL's operating profit rose 47 per cent to Rs 53.34 crore, as against Rs 36.32 crore in the previous year. (However, net profit grew only 30 per cent, which indicates a higher provisioning.)

Like most banks, BOBL also made a lot of money in treasury operations, mainly selling Government bonds held for trading.

Income from treasury operations increased to Rs 33 crore from Rs 12.5 crore in the previous year.

Total deposits increased 13 per cent to Rs 1,823.26 crore, while advances rose 16 per cent to Rs 807.71 crore last year.

Mr Krishna Murthy said that the average cost of deposits slid to 6.77 per cent from seven per cent in the previous year. He said that the bank enjoyed an average spread of 2.6 per cent.

BOBL has one overseas branch - in Bangkok - whose gross profit increased 36.58 per cent last year, he said.

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