Syndicate Bank, on Monday, reported a net profit of Rs.463 crore in the second quarter ended September 30, 2012, an increase of 43 per cent over the corresponding quarter of the previous year. The bank’s operating profit dipped 5.38 per cent in the second quarter on an annualised basis, despite a 13.39 per cent increase in net interest income. Describing the quarter as being “challenging,” Chairman and Managing Director M. G. Sanghvi said the bank managed to increase yield on advances by focusing on retail, micro, small and medium enterprises (MSME) and mid-sized corporate segments.

The bank, Mr. Sanghvi said, managed to keep non-performing assets (NPA) “under control despite the economic slowdown.” “We have managed to keep the proportion of net NPAs to total assets at last year’s level,” he said. Referring to the bank’s NPA coverage ratio of 82.26 per cent in the last quarter, Mr. Sanghvi said, “Most peers have a ratio in the 65 per cent range, and, despite the difficulties, we managed to increase our coverage ratio from 78.50 (in the quarter ending September 30, 2011) to 82.26 per cent,” he said.

The bank faced pressure on the lending as well as deposit side, which was reflected in the cost of deposits increasing by 31 basis points and the yield on advances dipping by 7 basis points. Net interest margin was 3.33 per cent at the end of the quarter, down 11 basis points from a year earlier. Referring to the pressure on margins, Mr. Sanghvi said, “We are in a relatively good position because very few banks have a net interest margin of more than three per cent.” With regard to the problems posed by rising NPAs, Executive Director M. Anjaneya Prasad said, “Maintaining asset quality is the biggest problem for banks as even big corporates are turning to seek corporate debt restructuring (package).”

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