LOWER CREDIT OFFTAKE PULLS DENA BANK NET DOWN 4% IN Q3

Excess liquidity coupled with lower credit offtake pulled Dena Bank's net profit down by 4 per cent to Rs 135 crore in the third quarter ended December 31, 2009 as against Rs 140 crore in the corresponding period last year.


If not for the interest (Rs 32 crore) on income-tax refund received in the December 2008 quarter, the bank's bottom line would have shown a 24 per cent growth, said the Dena Bank Chairman and Managing Director, Mr D.L. Rawal.


In the reporting quarter, the bank's net profit was negatively impacted due to slow credit offtake (Rs 900 crore) leading to parking of excess liquidity to the tune of Rs 2300 crore in mutual funds and a 22 per cent increase in interest expenses (Rs 733 crore in Q3FY10 vs Rs 603 crore in Q3FY09).


Net interest income (i.e. the difference between interest earned and interest paid) was down 20 per cent at Rs 283 crore (Rs 352 crore). Non-interest income (comprising profit on sale of investments, forex income, commission, etc) was 3 per cent lower at Rs 133 crore (Rs 138 crore).


While the bank managed to contain gross NPAs at Rs 585.52 crore (Rs 585.47 crore), net NPAs increased by 37 per cent to Rs 365 crore (Rs 266 crore). The increase in net NPAs comes in the wake of lower provisions and contingencies at Rs 29 crore (Rs 46 crore).


The public sector bank's net interest margin improved to 2.53 per cent ( 2.28 per cent) as it focussed on growing low cost current account, savings account (CASA) deposits. Year-on-year CASA deposits increased by 24 per cent to Rs 16,971 crore (Rs 13,707 crore).


Year-on-year total deposits increased by 31 per cent to Rs 47,844 crore (Rs 36,611 crore) and advances increased by 20 per cent to Rs 30,924 crore (Rs 25,686 crore).


Source: http://www.thehindubusinessline.com/2010/01/29/stories/2010012952230600.htm