Q2 net profit of Syndicate Bank rises 11%

Q2 net profit of Syndicate Bank rises 11%

Bangalore: City-based Syndicate Bank posted a better than expected 11% rise in its second quarter net profit on the back of 42% rise in interest on advances. Net profit for the quarter was Rs227.58 crore, compared with Rs205.07 crore in the year ago period.

The state-run bank’s net interest income, however, fell sequentially. The bank posted a net interest income of Rs489.11 crore, up from Rs484.58 crore in the year-ago period but lower than Rs546.99 crore in the first quarter.

“Net interest income is driven by increase in advances. During the last six months, as visible in the industry trends, there is no increase in advances growth," the bank’s chairman and managing director C.P. Swarnkar said.

Depositors are now more inclined towards term deposits. The cost of funds has also risen, putting net interest income under pressure, he added.

The bank’s total income rose 35% to Rs2,155 crore on interest income growth and operating profit rose to Rs326.02 crore from Rs295.22 crore. Its capital adequacy ratio remained unchanged at 12.19%.

The bank, in which the government holds a 66.47% stake, said its core deposits have increased to Rs10,348 crore as of September from Rs3,030 crore as of September 2006. Though advances growth has been low, the bank will achieve its targeted 25-30% business growth in the later half of the year. On Friday, the bank’s stock rose 2.45% on the Bombay Stock Exchange to close at Rs87.90.

Anand Dama, an analyst with KJMC Institutional, said the next two quarters could be good for the banking sector, but equity dilution and sudden stock movements could affect the bank’s stock price.