MORE GOVERNMENT BANKS TAKE A HIT ON NET PROFIT IN THIRD QUARTER

Other than Canara Bank and Oriental Bank of Commerce, many of the Public Sector Banks have shown decline in their profits in the third quarter ended December 2009 due to subdued treasury income and higher provisioning requirement.

Bank of India has reported a decline in its net profit for the second straight quarter, as its net profit dipped 53.44 per cent to Rs 406 crore compared to Rs 872 crore reported in the same period of the previous year.

With Rs 650 crore of fresh non-performing assets (NPAs) being added to the Bank of India’s book, NPA provisioning increased 115 per cent to Rs 446 crore. Both net and gross NPAs jumped to 1.03 per cent and 2.67 per cent from 0.52 per cent and 1.63 per cent, respectively. Net interest income marginally declined to Rs 1,495 crore for the reporting period.

Canara Bank, on the other hand, reported a 50 per cent jump in net profit at Rs 1,053 crore in the quarter. Its total income rose by just 1.6 per cent to Rs 5,469 crore. The bank has cut down its non-tax provisions by 52.5 per cent to Rs 167.4 crore during the quarter compared to a year-ago period. A sharp decline in the cost of deposits, which stood at 6.25 per cent compared to 6.81 per cent in the corresponding quarter last year, also helped the lender.

Its net interest income rose by 18.8 per cent to Rs 1,478 crore compared to the year-ago period.

Central Bank of India saw a 13 per cent fall in net profit to Rs 308.44 crore for the third quarter against Rs 353.2 crore at the end of the previous comparable quarter. The bottom line was pulled down by a jump in provisions, which were Rs 178.35 crore compared to a write-back of Rs 97.15 crore in the corresponding quarter last year. Of this, provisions for gross NPAs grew to Rs 15.92 crore from Rs 10.91 crore in the year-ago quarter.

Net interest income, or the difference between interest earned and interest expended, grew 8 per cent to Rs 731.3 crore from Rs 671.9 crore at the end of the December 2008 quarter.

Dena Bank has also reported a fall in net profit by 4.2 per cent to Rs 134.5 crore on account of a decline in treasury income and net interest income.

The absence of a one-time gain of Rs 32 crore as interest on income tax refund recorded in the year-ago quarter also weighed on the bottom line. Dena Bank’s trading profit fell to Rs 5.6 crore from Rs 49 crore in the corresponding quarter last year.

The saving grace was fee-based income, which grew nearly 23 per cent to Rs 83.27 crore from Rs 56.56 crore in the December 2008 quarter.

Oriental Bank of Commerce (OBC) has posted a 14.76 per cent rise in net profit to Rs 289.43 crore in the third quarter compared with Rs 252 crore in the corresponding quarter a year ago. The growth was led by a rise in interest income and fee-based income.

Total income rose 7 per cent to Rs 2,909.27 crore from Rs 2,718.20 crore in the same period last year, as treasury profit in the quarter came down to Rs 51 crore from Rs 184.8 crore last year.

The bank is also planning a follow-on public offer (FPO) after capital infusion from the government. The bank has requested the government to infuse Rs 1,500 crore.

Capital adequacy ratio stood at 13.20 per cent as per Basel-II and 11.66 per cent as per Basel-I. Interest income showed a growth of 11 per cent to Rs 2,671.59 crore in the quarter compared with Rs 2,400 crore in the corresponding period last year. Net interest margin improved to 3 per cent in the quarter against 2.02 per cent in the same period last year.

The business of the bank increased to Rs 189,299 crore at the end of December 2009, registering a growth of 20.58 per cent. Total deposits increased by 21.39 per cent to Rs 110,745 crore, while Casa deposits rose to Rs 27,050 crore.

The bank’s branch network reached 1,461 at December-end and it is planning to have 1,500 branches by the end of March this year. So far, it has opened 61 branches in the current financial year.

Source: http://www.business-standard.com/india/news/more-goverment-banks-takehitnet-profit-in-third-quarter/383954/

GOVT. BANKS STRUGGLE, BUT PRIVATE BANKS' CREDIT GROWTH PICKS UP

According to the data released by RBI, Private Sector Banks have seen a rise in credit growth while the Public Sector and Foreign Banks' credit growth is still slowing down.


The pace of credit growth for private sector banks increased to 9.8 per cent for 12 months up to January 15, compared to 8.9 per cent a year earlier. From January 16, 2009, to January 15, 2010, private banks extended additional loans worth Rs 47,940 crore, compared to Rs 40,045 crore in the previous 12 months.


Foreign banks continued to squeeze their loan books. From January 16, 2009, to January 15, 2010, they pared their loan assets by 9.7 per cent, as against 13.4 per cent growth in the previous 12 months. Total outstanding loans of foreign banks fell Rs 16,720 crore to Rs 1,55,532 crore in the 12 months up to January 15, 2010.


Public sector banks saw their credit growth slow to 16.8 per cent for 12 months up to January 15, 2010, compared to 27 per cent a year earlier.


From January 16, 2009, to January 15, 2010, they disbursed Rs 322,500 crore loans, compared to Rs 408,390 crore in the previous 12 months.


Most public sector banks have almost given up any hope of meeting the 20 per cent credit growth target they had set at the start of the financial year. State Bank of India (SBI) and Union Bank had a target of 25 per cent credit growth: SBI is willing to settle for up to 18 per cent credit growth by March-end, while Union Bank Chairman and Managing Director MV Nair said overall bank credit was expected to grow 15 per cent.

BOUNCING BACK Credit flow from scheduled commercial banks (Rs cr)
Banks	Outstanding as on  Jan. 15,  2010	As on Jan. 16, ‘09		As on Jan. 15, ‘10
		Amount	%	Amount	%
Public sector	2,241,219	408,390	27.00	322,500	16.80
Foreign	155,532	20,374	13.40	-16,720	-9.70
Private	537,025	40,045	8.90	47,940	9.80
All scheduled commercial*	3,008,909	476,514	22.00	366,832	13.90
* Including Regional Rural Banks                                                          Source:RBI

RBI had, during the course of the year, revised the 20 per cent target for credit growth to 18 per cent.


Source: http://www.business-standard.com/india/news/govt-banks-struggleprivate-banks/credit-growth-picks-up/383958/

CANBANK AIMS TO UP HOME LOAN PORTFOLIO

According to Mr. K.L. Jagadish Pai, Executive Director of Canara Bank, the bank is aiming to double its home loan portfolio from the existing Rs.8464 crore to Rs.17500 crore by the end of December 2010. He said the bank has performed better in home loan sector and achieved 27% growth in the first three quarters of the present fiscal ended December 2009 compared to the same period last year.

He said the bank has increased the number of retail hubs to 37 across Tier-I, Tier-II and Tier-III cities in the country. The bank will focus more on the individual home loan seekers than the commercial real estate sector. The ticket size of these loans will be Rs 15-20 lakh.

The total sanctions of the bank presently stand at close to Rs 30,000 crore, part of it will be disbursed over next 18 months.

Source: http://www.business-standard.com/india/news/canbank-aims-tohome-loan-portfolio/383900/

RISING BAD LOANS HIT BANK OF INDIA NET IN Q3

Lower treasury income and increase in bad loans pulled down Bank of India's net profit BY 53 per cent to Rs 405 crore for the quarter ended December 31, 2009, against Rs 872 crore in the same period of the previous fiscal.

Within non-interest income, profit from sale of securities fell 68 per cent to Rs 137 crore (Rs 435 crore) and profit from exchange transactions also fell 68 per cent to Rs 76 crore (Rs 237 crore).

Cost of deposits fell to 5.26 per cent (6.11 per cent). The bank is looking to increase the share of low cost CASA (current account savings account) deposits to 35 per cent by the end of this fiscal.

In the third quarter, the bank added over 22 lakh customers and the target is to take the total number of customers from 3.4 crore to 4 crore by March 2010.

The fresh additions to non-performing assets or slippages in the December-ended quarter were about Rs 650 crore.

The provisions for NPAs more than doubled to Rs 446 crore (Rs 207 crore). The target is to bring down net NPA levels to less than 1 per cent by March 2010.

The bank has about Rs 30,000-35,000 crore worth unavailed sanctions, of which Rs 13,000-14,000 crore are from the infrastructure sector.

In the third quarter, the credit growth was Rs 6,750 crore. In the fourth quarter, credit growth is likely to be around Rs 10,000 crore.

For the current fiscal, the bank is targeting 15 per cent growth in credit and is planning to recruit 3,950 staff next fiscal, which will include 1,700 officers and 2,250 clerks and specialists.

Source: http://www.thehindubusinessline.com/2010/01/29/stories/2010012952250600.htm

IOB PROFITS FALL 74%

Indian Overseas Bank's net profit was dented by 74 per cent to Rs 102 crore for the third quarter of 2009-10 due to provisioning for bad debts, wage settlement and a fall in treasury profits compared with Rs 388 crore for the same period the previous year.

About Rs 1,000 crore of bad debts were added during the last nine months, of which Rs 444 crore was from infrastructure and educational institutions, Rs 165 crore from priority sector and Rs 200 crore each from trade finance and real estate sector.

According to the clarification by the Chairman and Managing Director of the Bank, the build up of bad debts was not a result of restructured assets. Of the total amount of Rs 8,200 crore restructured loans, only Rs 745 crore were bad loans, of which Rs 600 crore of assets would be upgraded to standard assets.

The recent mandate by the Reserve Bank of India to hike provisioning on bad debts to 70 per cent, has impacted IOB as it had to make additional provisioning of Rs 232 crore due to build up of bad debts. On treasury income, the bank earned only Rs 17 crore for Q3 of 2009-10 compared to Rs 382 crore for the same period last year. Pending finalisation of wage revision, a provision of Rs 88 crore was made towards wage arrears.

The bank expects to sell 15-20 per cent of bad debts to Asset Reconstruction Companies provided they get 60 per cent realisation of asset value so that the bank can cut down its provisioning on bad debts.

Advances grew by 11 per cent to Rs 79,408 crore and deposits posted a 14 per cent increase to Rs 1,06,429 crore as of December 31, 2009 from the previous year. Credit sanctioned but yet to be disbursed was Rs 15,000 crore, only Rs 5,000 crore has been disbursed in the last nine months.

Source: http://www.thehindubusinessline.com/2010/01/29/stories/2010012953660700.htm

LOWER COST OF DEPOSITS LIFTS ORIENTAL BANK Q3 NET 15%

A robust growth in net interest margin (NIM) on the back of decline in cost of deposits has helped Oriental Bank of Commerce (OBC) report a 15 per cent increase in net profit for the quarter ended December 2009 at Rs 289.43 crore (Rs 252.19 crore).

This bottom line growth has come mainly through strong growth in core operations and despite a subdued performance on the treasury front this quarter.

For the quarter under review, net interest income of the bank grew 54.35 per cent to Rs 872.87 crore (Rs 565.53 crore). However, treasury income had slumped to Rs 51 crore, from a level of Rs 184 crore in the same quarter last year. NIM increased to 3 per cent from 2.02 per cent and 1.8 per cent in the previous two quarters.

OBC's cost of deposits has come down from a level of 7.84 per cent a few quarters back, to 6.24 per cent for the quarter under review, thereby boosting margins. The average cost of deposits had come down on the back of new savings accounts that were opened by the bank and with current and savings accounts (CASA) deposits on the rise.

The 14.77 per cent increase in net profit had come despite a substantial increase in provisions and contingencies, which jumped to Rs 333.36 crore from Rs 134 crore.

The largest segment in the provisions and contingencies was accounted for by taxes at Rs 141 crore (Rs 82 crore), followed by a contingency of Rs 100 crore towards agriculture debt relief, for which settlement may not be received. The bank has also provided Rs 45 crore as provision for Non-performing Assets (NPAs), compared to Rs 68 crore in same period last year.

The outstanding restructured advances stood at about Rs 5,300 crore.

Source: http://www.thehindubusinessline.com/2010/01/29/stories/2010012953690700.htm

CENTRAL BANK OF INDIA NET UP 74.4% (YoY) - PROVISION COVERAGE RATIO 73.3%

Central Bank of India has posted a net profit of Rs. 887.17 crore for nine months ended December 31, 2009 as compared to Rs.508.73 crore for the nine months ended December, 2008 recording a growth of 74.4% on YoY basis.

The total business of the Bank increased to Rs.246722 crore as on December 31, 2009 from Rs.200249 crore as on December 31, 2008, a growth of 23.21% (YoY) basis. Gross NPA ratio declined to 2.72% as on December 31, 2009 from 2.81% as on December 31, 2008. Net NPAs as percentage of net advances declined to 0.74% as on December 31, 2009 from 1.18% as on December 31, 2008. NPA Provision Coverage increased to 73.33% as on December 31, 2009 from 58.70% as on December 31, 2008. This coverage of 73.33% is higher than 70% stipulated  by RBI to be achieved by December 31, 2010. Return on Assets has increased to 0.76% as on December 31, 2009 from 0.54% as on December 31, 2008. Net Profit for the quarter ended December amounted to Rs. 306.45 crore, a dip of 13.3% over the corresponding figure of previous year, the reason being the net profit of the Q3 of 2008-09 includes write back of depreciation in the investment to the tune of Rs. 115 crore where as Bank had to provide for additional depreciation of Rs.144 crores in the current quarter. But for the same the growth in the profit in current quarter would have shown a growth of 60%. The benchmark yield in current quarter has hardened to 7.58% from the level of 7.15% in September 09. In the corresponding period of Dec.’08 the yield had softened to 5.25% from previous level of 8.64% in Sept.’08 and thus the depreciation in the current quarter

had higher impact from adverse movement of yield.

The above information was given by Mr. S. Sridhar, Chairman & Managing Director of the Bank, while addressing a Press Conference at Mumbai on 28th January, 2010.

Performance Highlights of the working results as on December 2009 are as under:

BUSINESS EXPANSION

• Aggregate deposits of the Bank have increased to Rs.155648 crore as on December 31, 2009 in comparison to Rs. 118782 crore as on December 31, 2008 registering a growth of 31.0% on YOY basis.

• The CASA Deposits has grown from Rs.41513 crore as on December 31, 2008 to Rs.46594 crore as on December 31, 2009 with a growth of 12.24% on YoY basis.

• The gross advances have increased to Rs.91074 crore as on December 31, 2009 from Rs.81467 crore as on December 31, 2008 at a growth rate of 11.8% on YoY basis.

• Business per branch has increased to Rs.64.17 crore as on December 31, 2009 compared to Rs.54.30 crore as on December 31, 2008, registering a growth of 18.2 % on YoY basis.

• Business per employee has increased to Rs.7.13 crore as on December 31, 2009 from Rs. 5.58 crore as on December 31, 2008, registering a growth of 27.7% on YoY basis.

• The investments has increased to Rs. 54338 crore as on December 31, 2009 from Rs. 37025 crore as on December 31, 2008 at a growth rate of 46.8% on YoY basis.

CAPITAL ADEQUACY

• Capital Adequacy of the Bank stands at 11.83% (Basel I) as on December 31, 2009 in comparison to 10.02% as on December 31, 2008.

• As per Basel II the CRAR stands at 12.58% as on December 31, 2009 in comparison to 10.43% as on December 31, 2008. (Tier I – 7.14% and Tier II – 5.44%).

ASSET QUALITY

• Net NPA stood at Rs.661 crore as on December 31, 2009 from Rs.945 crore as on December 31, 2008 improved by 30.05% on YoY basis.

• The percentage of net NPA as on December 31, 2009 is 0.74% of net advances.

• NPA Coverage – cum- Provision is 73.33% as on December 31, 2009

PROFIT

• Operating Profit of the Bank was up by 49.1% at Rs.1464.49 crore as on December 31, 2009 from Rs. 982.20 crore as on December 31, 2008 on YoY basis.

• The Net Profit of the Bank for the period ended December 31, 2009 stood at Rs. 887.17 crore as compared to Rs.508.73 crore as on December 31, 2008 posted a growth of 74.4% on a YoY basis.

• Net Interest Income of the Bank increased to Rs. 1881.65 crore for the period ended December 31, 2009 from Rs. 1795.04 crore for the period ended December 31, 2008 registering a growth of 4.8% on YoY basis.

• Non Interest Income of the Bank increased to Rs. 1166.3 crore for the period ended December 31, 2009 from Rs. 566.92 crore for the period ended December 31, 2008 registering a growth of 105.7% on YoY basis.

KEY FINANCIAL RATIOS

• Cost to income ratio improved to 46.12% for the quarter ended December 31, 2009 from 52.55% for the quarter ended December 31, 2008 on QoQ basis.

• Cost to income ratio improved to 51.95% for the period ended December 31, 2009 from 58.42% for the period ended December 31, 2008 on YoY basis.

• Return on Assets has increased to 0.76% as on December 31, 2009 from 0.54% as on December 31, 2008.

• Cost of deposits has reduced to 6.10% for the quarter ended December 31, 2009 as compared to 6.89% for the quarter ended December 31, 2008 on QoQ basis.

• Yield on advances decreased to 9.82% for the quarter ended December 31, 2009 when compared to 10.46% for the quarter ended December 31, 2008 on QoQ basis.

SEGMENTWISE ADVANCES

• Under Priority Sector Advances of the Bank, the agriculture advances stood at Rs. 13846 crore at the end of December 31, 2009 increased from Rs. 12335 crore at the end of December 31, 2008 registering growth of 12.3% on YoY basis.

• Under SME sector the advances were at Rs. 10191 crore as on December 31, 2009 as against Rs. 6009 crore for the corresponding period of previous year registering a growth of 69.6% on YoY basis.

• Retail Loans grew from Rs. 8821 crore as on December 31, 2008 to Rs.10283 crore as on December 31, 2009 with a growth of 16.6 % on YoY basis.

• Corporate Credit portfolio of the Bank registered YoY growth of 48.3% with the outstanding at Rs. 60705 crore as on December 31, 2009 vis-à-vis Rs.40921 crore as on December 31, 2008.

TECHNOLOGY INITIATIVES

• CBS implemented in 1223 branches. 100% CBS during 2010-11.

• 400 ATMs (on –site and off- site ). 500 more to be added by May 2010 and to be increased to around 2000 by the end of the year 2010-11.

NEW INITIATIVES

• e- tax has been introduced through e-banking.

• Corporate Internet facility is launched for all corporate clients of CBS branches of the Bank.

• New SWIFT Alliance Messenger (SAM) has been implemented.

HR INITIATIVES

• To bring down average age of employees, fresh recruitment in both clerical as well as officers cadre have been carried out and young talents are being recruited through Campus Recruitment.

• Training accorded high priority. Special Training Programmes specially to Executives in Senior and Top Management Grades in the areas of soft skills such as Leader Development, Managerial Excellence are being carried out on regular basis. Interactive sessions of the Top Management Team with eminent management professionals of international repute to increase the horizons of knowledge are being carried out and Pre-retirement counseling programmes started to enable smooth transition of employees from active services to retired life.

PRIORITY SECTOR

• IT based Financial Inclusion in Hoshangabad (M.P.), Sarguja (Chhattisgarh), Goalpara (Assam), Warangal (A.P.), Dhule (Maharashtra), Jhalawar, Kota and Baran District in Rajasthan.

• Tie-up for financing suppliers of Nano Car Project relocating from Singur to Sanand.

RETAIL

• New Product “Cent Gold Loan” launched for sanctioning loan/Overdraft up to Rs.6.00 lac to individuals including staff.

• Tie-up made with Insurance Companies under group policies for Housing Loan & Educational Loan borrowers.

• New Product “Cent Gift Card” introduced.

• Recurring Deposit Scheme introduced with personal accidental insurance.

• New Scheme “Cent Swabhiman Plus” introduced assuring monthly annuity to senior citizens by mortgaging their self occupied and owned property.

• Introduced SMS services & On- Line application for major retail products.

• Sale of 24 Karat (0.999 purity) Gold Coin started through 10 designated branches.

PROJECT SYNDICATION & UNDERWRITING

• The Bank has formed a “Project Syndication & Underwriting Cell”.

• The Cell has underwritten a Term Loan of Rs. 1500 crore for a big corporate and achieved its financial closure.

• At present, Rs. 4500 crore of syndication business involving 5 accounts is at various stages of negotiation/ finalization.

• So far the cell has earned a total fee of Rs. 8.5 crore.

AWARDS /RECOGNITION

• Bank received “ Banking Excellence” award from Shri Sultan Ahmed, Minister of State for Tourism, Government of India

FUTURE STRATEGIES

• Creation of verticals for focused attention on Corporate Financing, Mid Corporate Financing, Asset Recovery Branches, and Credit Processing Centres for Retail Banking, Focused attention on CASA for reduction in the cost of deposits and reduction in the dependence on Bulk/ High Cost Deposits.

CANARA BANK PROFIT RISES 50% ON NET INTEREST INCOME

Canara Bank has posted a net profit of Rs 1,052.58 crore for the third quarter of this financial year, up 50 per cent from Rs 702 crore recorded during the corresponding quarter of last year due to increase in Net Interest Income, decline in cost of  deposits and with no increase in operating costs.

Besides, the bank's provisions and contingencies came down 52.5 per cent to Rs 167.41 crore (Rs 352.57 crore).

The bank's net interest income rose 18.8 per cent to Rs 1,478 crore (Rs 1,244 crore) despite the yield on advances slipping to 10 per cent (10.69 per cent). The cost of deposits stood at 6.25 per cent (6.81 per cent).

Significantly, the bank's total income and other income have grown at 1 per cent and 3.1 per cent respectively in the backdrop of its treasury profit coming down from Rs.344 crore to Rs.294 crore this year.

With regard to NPAs, the provision coverage ratio was at 74.4 per cent, which is well above the stipulated 70 per cent. The bank's capital adequacy ratio stood at 14.44 per cent.

Source: http://www.thehindubusinessline.com/2010/01/29/stories/2010012952170500.htm