State-run lender Bank of India on Monday said it recorded net profit of Rs 494 crore in the quarter ended March 2011. This was a rise of 15.36 per cent compared to the same period last year. The rise in profit was aided by high net interest income.
The bank has recommended a dividend of 70 per cent or Rs 7 per share for 2010-11.
The bank’s net interest income rose 48.69 per cent to Rs 2307 crore from Rs 1552 crore in the year-ago period.
However, the provision for pension liability in the fourth quarter weighed on the results. “Provisions towards pension liabilities of about Rs 1,100 crore were required for financial year 2010-11, of which Rs 980 crore were made in the fourth quarter. This had an impact on the net profit,” said Chairman and Managing Director, Alok Misra.
The bank’s margins shrunk to 3.38 per cent from 3.49 per cent in the previous quarter, owing to a rise of 47 basis points in the cost of deposits. The yields on advances increased by 32 basis points.
The bank saw a credit growth of 22.16 per cent in 2010-11, compared to the previous financial year. For the current financial year, the bank plans to record a credit growth of 21 per cent. The bank would focus on retail credit growth and expects its loan book to grow by 20-22 per cent on a base of Rs 16,648 crore (March 31, 2011).
The bank’s deposits rose 28.67 per cent in 2010-11, while the share of low-cost deposits — current and savings account deposits (CASA) — in total deposits slid to 29 per cent from 32 per cent a year ago. “The rise in term deposits rates, especially in the second half of 2010-11, saw money moving from deposit accounts to term deposits,” said Executive Director, B A Prabhakar. The bank plans to to improve its CASA ratio to 35 per cent by March 2012. “This seems to be a challenging task, given the higher interest rates,” said Prabhakar.
On plans to raise capital, Misra said the bank would need capital to support expansion in its balance sheet and meet capital adequacy norms. It would consider a follow-on public offer or rights issues, for which, it would take decision during the course of the year. The bank expects to maintain capital adequacy of 13 per cent, with Tier-I capital of 8.5 per cent.
Allahabad Bank net up
Public sector lender Allahabad Bank on Monday reported net profit of Rs 258 crore for the quarter ended March 2011, a rise of 14.74 per cent compared with Rs 225 crore recorded in the same period last year.
During the quarter, the bank recorded fresh slippages of about Rs 812 crore, against Rs 650 crore in the year-ago period.
Chairman and managing Director J P Dua said the addition of nearly Rs 500 crore of agricultural non-performing assets (NPAs) in the last quarter led to higher NPAs. Net NPAs as on March 31, 2011 stood at 0.79 per cent, compared with 0.66 per cent in the year-ago period. The ratio of gross NPAs to gross advances stood at 1.74 per cent as on March 31, 2011, against 1.69 per cent on March 31, 2010.
The bank plans to raise $500 million through the issuance of medium-term notes of tenures between five and five-and-a-half years. Medium-term notes are corporate debt instruments which help provide regular funding to issuers. These would be listed on the Singapore Exchange. The bank would use the funds to expand overseas operations, particularly in Hong Kong and Bangladesh. The bank expects to raise the entire corpus in the next two-three months, said Dua. The bank also plans to raise the money at a price of the London interbank offered rate plus 250 basis points, said Executive Director D Sarkar.
ING Vysya to raise capital
Bangalore-based private sector lender ING Vysya Bank would raise capital through the issuance of 28.5 million equity shares. In a filing to the Bombay Stock Exchange on Monday, the bank said it would issue the shares through preferential allotment and qualified institutional placement.
“The current fund-raising plan is an enabling resolution and is subject to the approval of shareholders. The amount to be raised is not determined yet,” said a senior bank official. The bank had earlier said it was considering raising funds through both debt and equity in 2011-12. The bank recorded a 34 per cent rise in net profit at Rs 91.3 crore in the quarter ended March, owing to a high growth in fee-based income. The bank’s total income rose 11 per cent to Rs 438.9 crore, compared with Rs 395 crore in the year-ago period.
