City Union Bank Ltd today said that it would look at raising Rs 300 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 Rs 22,000 crore.
N Kamakodi, executive director, City Union Bank, said that the bank received the approval of its board and shareholders to raise money.
“We will review the situation in the fourth quarter and take a final call on the timing of the proposed fund raising,” he said, adding that the funds could also be raised through a combination of rights issue and QIP.
He said, “if the bank is going to grow at 38-40 per cent, we will be needing this money”, said Kamakodi. At present, the bank’s capital adequacy ratio (CAR) is in a comfortable position, according to Kamakodi.
In the last three years, the bank had raised Rs 200 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 Rs 22,000 crore for the current fiscal. This include deposits of Rs 13,000 crore and advances of Rs 9,000 crore. Currently, the bank's business is around Rs 19,000 crore.
On CUB 's performance, Kamakodi said that net profit rose to Rs 61.58 crore during the quarter ended September 30, from Rs 45.75 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 Rs 104 crore from Rs 59.11 crore”, Kamakodi said.
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The bank's total income rose to Rs 336.08 crore in the second quarter from Rs 284.98crore, an increase of 17 per cent, a year ago.
CUB's gross non-performing assets (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, on how to turnaround efficiency and to increase other income, said Kamaodi.
Commenting on the bank's expansion, he said that at present the bank has 230 branches and planned to increase it to 300 by the end of June 2011.