Corporation Bank Q2 net soars 52.87% on core income

Corporation Bank Q2 net soars 52.87% on core income

Mumbai: State-run Corporation Bank posted a 52.87% rise in July-September quarter on better net interest income and core fee income, beating analyst estimates.

Net profit for the quarter rose to Rs2.92 billion, up from Rs1.91 billion a year ago. A Reuters poll of analysts estimated profit for the quarter at Rs2.31 billion.

“Profit was driven by 23% rise in net interest income and 38% growth in core-fee income," J.M. Garg, chairman and managing director, told Reuters over the telephone.

The bank’s high-cost deposits, bearing 11% interest, would mature by the third quarter, Garg said.

“This will result in cost of deposits falling below 6%," he said.

The lender expects the net interest margin to be at 2.4% to 2.5% by the end of 2009-10 with the falling cost of deposits, Garg said.

Pending outcome of the ongoing negotiation at industry level, the bank has made an adhoc provision of Rs530 million towards wage revision.

The bank was looking at a loan growth of around 20% for the fiscal, he said.

Indian bank loans rose 11% on year in October, compared with 27% in late 2008 and 30% in the year through March 2008.

Shares in the bank ended down 1.9% at Rs420.15 on the Bombay Stock Exchange.