Syndicate Bank moderates growth targets under new MD

Course correction to grow share of low cost deposits

After showing heady business growth in 2014-15, above the sectoral trend, Syndicate Bank is scaling down the pace of business expansion for 2015-16, to strike a balance in credit exposure and the liability profile.

Arun Shrivastava, who assumed charge as managing director & chief executive officer last month of the government-owned lender, termed last year’s credit growth of 17 per cent “abnormal”. He estimates not more than 15 per cent growth this year.

The Manipal-based bank saw 17 per cent growth in global advances to Rs 205,804 crore at the end of March 2015 from Rs 176,241 crore at end-March 2014. The banking sector's credit growth was 12.6 per cent for the 12 months ended April 3, according to Reserve Bank of India data.

In his first media interaction here as chief, Shrivastava said the thrust would be on growing the agriculture and small & medium size enterprise book, core strength areas.  Despite challenges in Andhra Pradesh and Telangana, they were able to achieve the mandatory targets for the farming sector in 2014-15.

“Like credit, deposits also grew at a rate way above the banking industry trend in 2014-15. While industry deposits grew by 12.8 per cent, Syndicate Bank clocked 20 per cent growth in deposits. This needs to be corrected and this year the growth driver should be mainly current accounts and savings accounts (Casa)”, he said. Deposit growth is pegged at 15 per cent.

Deposits increased 20 per cent to Rs 255,388 crore by March as against Rs 212,343 crore a year before. The share of domestic Casa deposits was 28.3 per cent of total domestic deposits at the end of FY15.

He said the bank had taken shareholders' approval to raise equity capital up to Rs 2,000 crore from Qualified Institutional Investors. They'd also look at issuing additional tier-I bonds. He declined to elaborate on specific capital plans, stating he'd provide details only after making a presentation to the finance ministry. This is due in Bengaluru next week, on capital requirements and business growth.

The Government of India infused Rs 460 crore of capital (including premium) in March through a preferential allotment of 37.47 million equity shares at Rs 122.75 each. It held 69.24 per cent stake in the bank at the end of March 2014.

The stock closed two per cent lower on Monday at Rs 97 on the BSE exchange.