Healthy growth in net interest income (NII) and fee income helped government-owned Corporation Bank report a 27.76 per cent increase in net profit to Rs 333.78 crore for the quarter ended June 30, as compared with Rs 261.25 crore in the same period of the previous year.
While NII grew 49 per cent to Rs 659.59 crore, fee income rose 29.23 per cent to Rs 162.10 crore. Trading profit, however, came down to Rs 13 crore as compared to Rs 185 crore last year, as yields on government bonds hardened.
The Mangalore-based bank has registered a 36.78 per cent year-on-year increase in loans, while deposit growth was 26.21 per cent. During the quarter, the bank disbursed loans worth Rs 17, 427 crore, while deposit accretion was Rs 18,908 crore. As a result, incremental credit deposit ratio was close to 100 per cent.
Chairman and Managing Director J M Garg said though the bank might hike deposit rates across various maturities shortly, that might not impact margins. “After the implementation of the base rate, all the loans which were priced around 4.5-5 per cent are now re-priced at 7.75-8 per cent. That will give us an interest income of Rs 300 crore,” Garg said.
The bank recently increased its retail deposit rates for the 1,000-day scheme from 7.25 per cent to 7.5 per cent. The bank raised its corporate bulk deposit rates and offered 7.25-7.5 per cent for three-year maturity to mop up Rs 3,000-4,000 crore in the first quarter. The bank aims to have a net interest margin of 2.5-2.75 per cent for the current financial year.
Garg also informed the government was likely to increase its stake in the bank to 60 per cent from 57 per cent at present. “The capital requirement for the bank to support growth for the current financial year is Rs 1500 crore.” The bank aims to have 25-30 per cent growth in business in the current financial year.
The bank’s stock closed at Rs 565.10 on the Bombay Stock Exchange, down 0.15 per cent from its previous close.
