The City Union Bank Ltd is looking to raise Rs300 crore through rights issue or by way of Qualified Institutional Placement (QIP). Meanwhile the bank has set a target to close the current fiscal with a total business of Rs22,000 crore.
N Kamakodi, executive director, City Union Bank said the bank received board and shareholders approval to raise the money. “We will review the situation in the fourth quarter and take a final call on timing of the proposed fund raising time”.
The fund raising even can be a combination of rights issue and QIP, said Kamakodi.
He added, “if the bank is going to grow at 38-40 per cent, we will be needing this money”, said Kamakodi He added, at present Bank’s Capital Adequacy Ratio (CAR) is in comfortable position.
It may be noted that in the last three years the bank had raised Rs200 crore through rights issue and through preferential allotments. The last rights issue was in December 2009.
The Kumbakonam-based bank had set a business target of Rs22,000 crore total business for the current fiscal. This include Deposit of Rs13,000 crore and Advances of Rs9,000 crore. Currently Bank’s business is around Rs19,000 crore.
Also Read
Commenting on CUB’s performance, Kamakodi said, net profit rose to Rs61.58 crore during the quarter ended September 30, 2010 from Rs45.75 crore, a year ago, an increase of around 35 per cent. “This was mainly through increase in net interest income which rose by 76 per cent to Rs104 crore from Rs59.11 crore”.
Bank’s total income rose to Rs336.08 crore in the second quarter from Rs284.98crore, an increase of 17 per cent, a year ago. CUB’s Gross NPA came down to 1.26 per cent from 1.99 per cent and net NPA to 0.54 per cent from 1.16 per cent.
Meanwhile, KPMG, which was appointed by the bank to advise on business process reengineering has submitted a draft report. The focus will be on CASA growth, how to turnaround efficiency and to increase other income, said Kamakodi.
Commenting on Bank’s expansion, he said, at present the bank has 230 branches by end of June 2011 it will be increased to 300.