Helped by a healthy jump in its net interest and treasury income, State-owned Corporation Bank on Wednesday clocked a 28 per cent jump in its June quarter net profit at Rs 333.78 crore.
The bank had posted a net profit of Rs 261.25 crore in the year-ago period.
Net interest income during the quarter rose to Rs 697.59 crore, up 49 per cent, compared to Rs 467.54 crore while treasury revenue jumped by an impressive 82 per cent during the period.
The Mangalore-headquartered bank’s deposits surged over 26 per cent to Rs 91,035 crore compared to the industry average of around 14 to 15 per cent. Its cost of deposits stood at 5.19 per cent.
However, the bank saw a marginal increase in its net non-performing assets (NPA), which went up from 0.32 per cent in June 2009 to 0.43 per cent this year.
“Some agricultural loans, a Rs 18-crore real estate loan of a commercial property developer and a part of our small and medium enterprises assets resulted in the increase (in net NPAs),” bank’s Chairman and Managing Director J.M. Garg told reporters.
The bank did a total business of Rs 1,55,840 crore in the quarter which included advances of Rs 47,378 crore.
Mr. Garg said a large part of the credit offtake this fiscal has been by the infrastructure sector and corporate borrowing is yet to pick-up but maintained that he sees the overall demand rising going forward.
“We will have to mobilise deposits as the demand for credit is slated to go up. We will increase our marketing efforts for that,” Mr. Garg said.
Mr. Garg also hinted at the cost of deposits going up as the RBI increased its short-term rates and said the bank would have to revisit its aggressive 7.75 per cent base rate post-October due to it.
However, he also added that as a result of the base rate implementation, the bank will be generating an additional Rs 300 crore this fiscal. “Earlier, people used to raise loans at 4.5-5 per cent, now they have no option but to pay more,” he said.
The bank has raised over Rs 500 crore capital this fiscal and would require an additional Rs 1,500 crore in order to meet its targeted advances of Rs 85,000 crore.
“The Government is working on a plan to infuse additional capital in banks and we have verbally conveyed our intention to get more capital...the other source of raising the money is through the open market,” Mr. Garg said.
