Corporation Bank to raise Rs10 bn in FY10

Corporation Bank to raise Rs10 bn in FY10

Kolkata: Corporation Bank is planning to raise Rs10 billion via bonds in fiscal year 2010, its chairman and managing director said on Tuesday.

“We have recently raised Rs10 billion through upper tier II capital and we are planning to raise another Rs10 billion through tier-I perpetual bonds and tier-II capital in FY10," JM Garg told reporters at an industry conclave.

Commenting about the April-June credit growth, he said it has not been on expected lines.

“On a year-on-year basis we are expecting a credit growth of 20% for the April-June quarter as compared to almost 30% in the corresponding period last year," Jarg said.

The bank is expected to grow its deposits by 25% in the same period, he added.

Consequently, the bank has revised its FY10 credit and deposit growth target by 200 basis points to 20 and 22% respectively, he said.

However, gross non-performing assets of the Mangalore-based bank are expected to increase on account of debt relief scheme.

“Many farmers under debt relief scheme are yet to repay, all these accounts would have to be treated as non performing, so our gross NPA in the current fiscal is expected to rise," he said.

During 2008/09, gross NPA stood at Rs5.59 billion.

Though net interest margin (NIM) is under pressure due to the lag effect of high deposit rates, the bank is expected to maintain its FY10 NIM at around 2.5%, Garg said, adding it is planning to cut interest rate on deposits.

“We are reducing the interest rate on deposits by 25-50 basis points across various maturities from 1 July," he said.

Talking about profitability for the fiscal, the chairman said the bank is looking at a profit growth of 20-25%.

“Our non-interest income is growing at around 40% which would compensate for the falling margins, so we would be satisfied with a profit growth of 20-30% in FY10," Garg added.