Dena sees CAR up at 12%, post public issue

Dena Bank executive director M V Nair has said that following the opening of the bank's Rs 216 crore public issue on January 24, its capital adequacy ratio (CAR) will increase to 12 per cent.

He said the bank will begin making provision for the investment fluctuation reserve (IFR) and has sought the Reserve Bank of India's permission.

"Our first priority was to clean the balance sheet, followed by accounting for the losses. After achieving these goals, we will start making provisions for IFR in this fiscal itself," Nair said in Ahmedabad on Monday.

He was in the city to announce the proposed public issue of eight crore shares of Rs 10 each at a premium of Rs 17. The second public issue of Dena Bank will close on January 29.

Gujarat is an important market for the bank, as over 500 of its 1,127 branches are in the state.

However, on the proposed merger of Dena Bank with another bank, Nair said while mergers are bound to happen, the bank is at present focussing on its activities to ensure its strength and stability.

"Even the Union finance minister has indicated that there will be mergers in the sector for bringing about economy of scale. However, at the moment, our focus is the bank's strength," Nair said.

He said after the bank reported a loss in the 2000-01 fiscal, it has staged a turnaround in the past three years, with a net profit of Rs 11 crore, Rs 114 crore and Rs 231 crore in the three subsequent fiscal years.

Without commenting on the expected net profit this fiscal, Nair said the rise will not be as steep as it has been in the past three years, because of several regulatory causes.

"But next fiscal will again be impressive as far as net profit is concerned," he said.

He added that five steps initiated in the past three years have brought about the turnaround.

These were an asset management programme, which has brought down the net non-performing assets to less than half at 7.8 per cent as of September 2004 from 16.31 per cent at the end of the 2001-02 fiscal, a fall in cost deposit, thrust on retail credit, technology push and tie-ups for cross-selling financial products.

Commenting on the bank's future strategies, M G Sanghvi, general manager, investment and risk management, said increasing capital adequacy, ensuring asset quality, upgradation of technology and a thrust on human resources will be taken up in a big way.