Syndicate Bank, on Saturday, reported a net profit of Rs.1,313.39 crore in 2011-12, an increase of 25 per cent over the previous year. Significantly, higher provisions made by the bank during the year, mainly for non-performing assets, affected profitability, admitted Chairman and Managing Director M.G. Sanghvi.
Mr. Sanghvi said provisions, which were higher by 30 per cent in 2011-12 when compared to a year earlier, were aimed at adopting a ‘prudent approach.'
“We could have made higher profits by providing less (for NPAs), but we chose an approach that is sustainable in the long run,” he told The Hindu. The bank's provision coverage ratio had improved from 77.18 per cent to 80.06 per cent. The ‘slippage' in NPAs was mainly because of the adoption of the new system-based classification and due to the adverse economic environment, he said.
Mr. Sanghvi said the bank's net interest margin was “a healthy 3.43 per cent, despite adverse economic conditions.” The bank's credit-deposit ratio, at 79.53 per cent, “is higher than the industry average and better than expected by the regulator,” he added.
Referring to the bank's request of capital injection of Rs.539 crore from the Centre to meet Basle III standards, Mr. Sanghvi said: “We are hopeful that this will happen in the current year.”
Keywords: Syndicate Bank financial results
