)
The decline in Bank's profit, whose chairman and managing director S K Jain was arrested by Central Bureau of Investigation (CBI) on August 2 for allegedly receiving illegal gratification of Rs 50 lakh from Bhushan Steel in return for granting credit extension, is attributed to the massive rise in provisions towards non-performing assets.
The Manipal-based Bank made a massive rise of 58.2% in provisions to Rs 538 crore during the quarter as against Rs 350 crore a year ago.
The total income of the bank went up 17% to Rs 5,681 crore compared to Rs 4,850 crore in the corresponding quarter last year. The operating profit was up 17.6% to Rs 954 crore from Rs 811 crore in the year ago quarter.
The Bank's scrip closed 1.88% lower at Rs 125 per share on BSE today.
During the quarter, the Bank witnessed fresh slippage to the tune of Rs 1,683 crore as against Rs 1,741 crore in the same quarter last year. The slippages came in textile sector, where one account turned into a NPA with a ticket size of Rs 380 crore. Provision coverage ratio stood at 65.38% in second quarter compared to 70.58% in same quarter last year.
The size of gross non-performing assets increased 35% to Rs 6,049 crore compared to Rs 4,472 crore in the year ago period. The percentage of net NPAs increased to 2.20% from 1.66% in the year ago period.
Its net interest income remained flat at Rs 1,422 crore compared to Rs 1,411 crore in the year ago period. Higher taxes at Rs 100 crore as against Rs 1 crore in the year ago quarter also contributed to decline in profits. Net interest margin came down to 2.57% from 2.90% in the corresponding quarter.
The CBI arrested Jain for allegedly negotiating with Bhushan Steel for an illegal gratification of Rs 50 lakh in return for granting credit extension to that company as it had defaulted on the payment of loan instalments amounting to several crores of rupees. Subsequently, the government has terminated his services.
The capital adequacy ratio under Basel-III declined to 10.42% from 11.58% last year. The return on assets dipped to 0.50% from 0.89% a year ago.
"The Bank has got adequate CRAR to support credit expansion. But keeping in view of Basel-III requirement, we have sought permission from the government for infusion of fresh equity of Rs 1,100 crore through QIP route," said M Anjaneya Prasad, executive director, Syndicate Bank.
He said the Bank has obtained board approval for raising additional Tier-I bonds of Rs 1,000 crore and Tier-II bonds of Rs 1,150 crore. The Bank would go to market to raise Tier-II bonds shortly, said T K Srivastava, executive director.
