Corporation Bank Q4 profit rises 20%

Corporation Bank Q4 profit rises 20%
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First Published: Sat, Apr 24 2010. 01 15 AM IST
Updated: Sat, Apr 24 2010. 04 11 PM IST
Mumbai: Mangalore-based Corporation Bank said on Friday that fourth quarter profit rose 20% from the year-ago quarter owing to a steep growth in loans.
However, a sharp drop in investment income as well as high provisions for restructured assets kept profit from rising further. While profit rose to Rs312.33 crore from Rs261.25 crore a year ago, investment income fell Rs279 crore to Rs11 crore, mainly owing to the rise in government bond yields.
While yields on 10-year bonds rose around 0.25% in the three months to 31 March, the movement was close to 1% in fiscal 2010 and banks have booked losses by selling bonds at the fiscal year-end after having bought them at a higher price earlier.
The bank’s advances grew 30.28% for the full year, faster than the industry average of 17%. Deposits also grew at a more-than-average pace of 25.34%. The industry grew at about 22% during the year. The decline in investment income brought down operating profit to Rs545 crore in the fourth quarter from Rs674.73 crore a year ago.
The bank increased the provision coverage ratio to 80.78% from 75.27% as an increasing number of its restructured accounts fell into the bad debt category. So far, the bank has restructured 12,370 accounts worth Rs2,763.87 crore, out of which Rs142.81 crore slipped into bad debt in the fourth quarter. Slippages occur when companies don’t pay their interest liability for 90 days at a stretch.
Slippages for the year were Rs230.25 crore involving 3,324 accounts. The bank’s provisions zoomed to Rs345 crore from Rs190 crore a year ago due to the restructured assets and improved provision coverage ratio.
The bank’s non-performing assets, after provisions, increased slightly to 0.31% of advances against 0.29% a year ago. Its non-interest income rose 49.5% to Rs196.92 crore.
Net interest margin, or difference between yields on advances and the cost of deposits, rose to 2.5% against 2.19% a year ago. The capital adequacy of the bank was at 15.37% against the regulatory minimum of around 12%.
Chairman and managing director J.M. Garg said his bank does not require capital from the government as of now and there is no need for raising interest rates. “Given the huge liquidity that we are in now, there is no need to raise interest rates immediately.”
The bank’s shares dropped 0.37% to close at Rs498.75 apiece on the Bombay Stock Exchange; the bellwether Sensex index gained 120.21 points, or 0.68%, to 17,694.20.
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First Published: Sat, Apr 24 2010. 01 15 AM IST