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Corporation Bank profit up 5%

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BS Reporter Mumbai
Last Updated : Jan 20 2013 | 4:33 AM IST

Public sector lender Corporation Bank reported five per cent rise in net profit, at Rs 370 crore, in the first quarter ended June 2012 due to higher provisioning toward bad loans.

The bank provided Rs 239 crore towards bad assets as against Rs 67 crore made during the corresponding quarter of last year.

The bank’s net interest income (NII) or the difference between interest earned and interest expended by 14 per cent to Rs 808 crore. Fee income rose by 11 per cent to Rs 207 crore.

Net NPA stood at 1.20 per cent, a rise of 68 basis points over the corresponding quarter last year.

“There were fresh slippages of Rs 722 crore during the quarter,” said Ajai Kumar, chairman and managing director of Corporation Bank. “We also restructured accounts worth Rs 1,075 crore of which around Rs 1,000 crore were from state electricity boards (SEBs).”

The bank’s loan book grew at 25 per cent year-on-year to Rs 98,546. Its deposits expanded by 14 per cent to Rs 1,34,103 crore year-on-year. Major demand was seen from retail sector, which grew at 33 per cent.

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The banks provision coverage ratio stood at 61 per cent which the bank intends to increase to 70 per cent which will impact profit in further two quarters, Kumar said.

The banks NIM was at 2.29 per cent down 19 basis points sequentially.

The bank’s capital adequacy ratio (CAR) at the end of the first quarter was 12.92 per cent.

The bank’s bulk deposits are at around 35 per cent of the total deposits. The bank has sought the time from the finance ministry to bring down the share of bulk deposits. Finance ministry had recently mandated the public sector banks to bring down the share of bulk deposits (including certificate of deposits) to 15 per cent of total deposits by March-2013. “We have sought extra time from the finance ministry to bring down the bulk deposits, though we’ll try to substitute most of them at the card rates to comply with the ministry’s directive” Kumar added.

 

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First Published: Jul 31 2012 | 12:24 AM IST

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