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Public sector lender Syndicate Bank is reworking its international banking strategy with London Branch focusing on customer lending than participating in interbank business to improve margins.
Its overseas loan book grew from Rs 27,244 crore in June 2013 (Q1 of FY14) to Rs 36,759 crore in June 2014 (Q1 of Fy15). Its net interest income (NII) from this stream fell from Rs 30 crore to Rs 26 crore.
As a step to boost NII and bottom-line, bank shifting focus from interbank lending market to customer credit (advances to corporates and firms including Indian companies).
The margins are better in this segment, said senior bank executive. According to presentation made to analysts, the net interest margin (NIM) fell from 0.48% in June 2013 to 0.31%.
The share of customer business was 20% few quarters ago and intent is to grow it to 40% by end of this is financial year, executive said.
It is seating on pile of foreign exchange as it raised $400 million through a senior unsecured bond offering in May 2014. The five-and-a-half-year bond was priced at a spread of 240 basis points over the five-year US Treasury.
The offering is denominated in dollars, with a fixed interest of 3.875% per annum. The bonds would mature on December 04, 2019.
Profile of International Business
| Jun-14 | Mar-14 | Jun-13 | |
| Advances | 36,759 cr | 32,506 cr | 27,244 cr |
| Deposits | 27,113 cr | 25,378 cr | 20,003 cr |
| Gross NPAs | 502 cr | 347 cr | 177 cr |
| Net Profit | 22 cr | 22 cr | 10 cr |
| Net interest margin | 0.31% | 0.31% | 0.48% |
| Source: Bank Q1 result presentation | |||
Syndicate Bank reported a 7.3% rise in net profit at Rs 485 crore for the first quarter-ended June, 2014 compared to Rs 452 crore in April-June 2013.
The total income of the bank rose by 16.8% to Rs 5,523 crore as against Rs 4,726 crore in the same quarter last year. Lower provisions during the quarter, which stood at Rs 468 crore as against Rs 489 crore a year ago, helped the bank to show better profits.
Its net interest income was up 1% at Rs 1,351 crore as against Rs 1,338 crore in the first quarter last year. The net interest margin declined to 2.47% from 2.83% a year ago.
Global deposits increased 17.72% from Rs 1,82,513 crore as at Q1, FY 2013-14 to Rs 2,14,863 crore as at Q1, FY 2014-15. Global advances grew by 18.11% to Rs 1,76,442 crore from Rs 1,49,383 crore.
