City Union Bank (CUB) is planning to raise Rs 600-700 crore from abroad by 2016-17 to meet its growth target. The bank is looking at different options, including the qualified institutional placement (QIP) route, to raise the fund. It has set a target of Rs 30,000 crore in advances by 2016-17, and would require around Rs 3,000 crore as capital reserves by the time.
"Right now, we have around Rs 1,600 crore as capital and with Rs 250 crore rights issue proceeds and another Rs 600 crore being added as profits, we may need another Rs 600-700 crore external funding by 2016, for which options, including QIP, will be explored," said N Kamakodi, managing director and chief executive officer.
At present, the capital adequacy ratio (CAR) is well above the levels prescribed by the Reserve Bank of India at 13.98 per cent of which the Tier-I CAR was at 13.27 per cent. Of the Rs 250 crore rights issue for which the bank got approval in January this year, it had already raised Rs 125 crore and the rest will be raised this quarter.
"Despite a difficult economic situation, we could register reasonably well results. The bank has reported a 25 per cent growth in earnings to Rs 35,648 crore last financial year, from Rs 28,563 crore in FY2012," Kamakodi said. The net worth as on March 31 increased 31 per cent to Rs 1,631 crore from Rs 1,243 crore a year ago. The lender has posted an increase of 14.59 per cent in net profit at Rs 82.48 crore for the quarter ended March 31 against Rs 72 crore a year ago.
Total income rose 26.18 per cent in the quarter to Rs 678 crore against Rs 537 crore earlier.
The bank could maintain the growth momentum and contain non-performing asset levels well, compared with peer banks. Of the total loan book, around 98 per cent are secured loans, the main reason the bank could maintain good asset quality, Kamakodi said.
Gross NPA was at 1.13 per cent, while net NPA stood at 0.63 per cent. Though there was a marginal increase in net NPA level, the gross addition in absolute terms during the whole year was around Rs 50 crore. The provision coverage was at 71 per cent.
