UTI Bank net up 136% to Rs 109 cr

Board also okays proposals to float two subsidiaries.

Mid-sized private sector UTI Bank today reported a 135.85 per cent jump in net profit to Rs 109.01 crore in the second quarter ended September 30, 2005 from Rs 46.22 crore a year earlier.

In the July-September 2004 quarter, the bank's net profit had fallen year on year as it had to provide for depreciation in its investments portfolio on transfer to held-to-maturity category.

The net profit in July-September 2005 has grown at a compounded annual rate of 30 per cent over two years, suggesting that the bank's profitability is close to its growth trajectory, said P J Nayak, chairman and managing director, UTI Bank.

UTI Bank's board also approved proposals to float two wholly-owned subsidiaries. One of them would be a sales and services subsidiary to deal with bank's products.

This subsidiary will also help the bank boost sales of its credit cards, which are planned to be rolled out in the fourth quarter of 2005-06. The second subsidiary will be a venture capital fund for providing finance to infrastructure.

In the second quarter of 2005-06, UTI Bank's total income increased by 94.23 per cent at Rs 865.73 crore against Rs 445.72 crore a year earlier. Net interest income (NII) stood at Rs 255.45 crore in July-September 2005, reflecting a healthy increase of 41 per cent from Rs 180.72 crore a year earlier.
 

IN FULL BLOOM
(Rs cr)	Sept quarter ended
	2004	2005
Interest earned	449.31	687.6
Other income	-3.59	178.13
Total income	445.72	865.73
Interest expenses	268.59	432.15
Total expenses	407.33	629.65
Net profit	46.22	109.01

"Despite a fall in the yield on advances and investments, a strong growth in advances and investments, together with a higher share of demand deposits, contributed to the rise in NII," said Nayak.

Advances grew by 75 per cent at Rs 18,404 crore as at end September 2005 from Rs 10,498 crore a year ago.

In the second quarter, yields have firmed up by 50 basis points, which reflected in the net interest margin at 2.80 per cent from 3.12 per cent a year ago.

However, the bank expects the NIM to rise when the credible pipeline of corporate advances, which is indicative of the upswing in the credit cycle in the country, translate into loan assets replacing existing short term advances.

The average cost of funds increased by 16 basis points to 4.89 per cent in the reporting quarter from 4.73 per cent in 2004.

The new generation private bank's capital adequacy ratio was 11.77 per cent against 10.67 per cent a year earlier. Its net non-performing assets were 1.03 per cent as on September 30, 2005. UTI Bank's shares closed up 1.67 per cent at Rs 258.20 on the Bombay Stock Exchange.