Syndicate Bank to aid SMEs

Syndicate Bank, which reported a loss of Rs 78 crore for the third quarter of FY05, has stated it would like to continue its focus on lending to sectors like agriculture, mid-corporates, SMEs, SSIs, housing and other retail segments.

Announcing the bank's expansion plans, N Kantha Kumar, CMD, Syndicate Bank said: "We have taken a strategic decision to swap high cost deposits with low cost deposits. Similarly, the bank's focus will be on building high yielding advances in its assets portfolio. To strengthen the operational units, the bank has embarked upon a drive to hire specialists in IT, credit, agricultural lending and forex. We are now poised to grow exponentially and our bottomline will look up because of our drive to accumulate quality and high yielding assets faster."

Kumar, who moved to Sydicate Bank from Canara Bank where he was executive director, added that from a shareholder's perspective, the bank's net worth has gone up to Rs 2,026 crore for the 9-month period of the current fiscal from Rs 1,628 crore for the same period during last fiscal, recording a growth of 24.45 per cent.

The return on net worth is at 13.82 per cent while the return on assets is at 0.46 per cent.

Syndicate Bank's operating expenses to average working funds (AWF) have declined from 3.13 per cent to 2.16 per cent but the cost to income ratio has moved from 75.21 per cent to 76.49 per cent for the 9-month period of 2004-05.

Staff cost to AWF has been brought down from 2.50 per cent to 1.62 per cent while business per employee has risen from Rs 2.06 crore to Rs 2.65 crore.

The bank, for the 9-month period of FY05 reported a gross NPA of 10.11 per cent, up from 6.93 per cent for the same period of previous fiscal.

"Provision to gross NPA has significantly improved, from 50.09 per cent to 62.66 per cent, while the coverage ratio has improved from 2.86 per cent to 2.89 per cent," Kantha Kumar noted.

The capital adequacy ratio is 11.42 per cent for the current nine-month period of 2004-05 as against 11.71 per cent reported during the same period of previous fiscal.

Syndicate Bank has also secured the RBI's approval to raise Rs 50 crore from the primary market and a decision on the timing is awaited from its board of directors.

Kumar further noted that the bank's agricultural portfolio has shown a substantial increase during the last nine months to touch Rs 3,781 crore, showing an increase of 39 per cent over the position in March 2004.

Syndicate Bank also proposes to float a dedicated fund, Rural Development Venture Capital Fund, for development of agri-business, processed foods, biotech, information technology and non-conventional sources in rural areas.