Growth across all segments boosts Axis Bank profit in Q2

Mumbai, Oct 22: Axis Bank reported a 25 per cent increase in net profit to Rs 920 crore in the July-September 2011 quarter against Rs 735 crore in the corresponding period last year.

Growth across all segments of business helped the bank post good results, said Mr Somnath Sengupta, Executive Director and Chief Financial Officer, Axis Bank.

Focus on core biz

“This was a good quarter as growth was well balanced. We will focus on core business going ahead,'' he said.

Credit growth will probably slow down for the banking sector, but Axis Bank will clock above average industry growth rate, he added.

Retail loans grew at a faster pace than corporate loans, as there was demand for home and auto loans.

Within the corporate loans segment, there was higher demand for working capital loans, while the demand for capital expenditure came from loans which were sanctioned earlier, Mr Sengupta said.

Non-performing assets increased due to slippages across all sectors. Going ahead, the bank would continue to focus on improving its credit quality, Mr Sengupta said.

Income from trading declined by 76 per cent to Rs 28 crore (Rs 108 crore).

Cost of funds increased, especially due to interest rates on term deposits going up in September. But it is not an alarming situation as liquidity is good.

The net interest margin improved over the preceding quarter as well as the corresponding year-ago period driven by stronger build up in CASA deposits, stable funding rates and a pick up in loan yields.

But the current level of NIM cannot be sustained and it will moderate. For the current fiscal the bank is targeting NIM in the 3.25 and 3.5 per cent range.

“Our ability to pass on further cost to borrowers will probably be limited. We will have to wait and watch,'' Mr Sengupta said.

H1 profit up 26%

For the six-month period ended September, the bank posted net profit of Rs 1,863 crore, up 26 per cent from Rs 1,477 crore in the corresponding period last year.

While capital adequacy ratio has dipped slightly, it is still comfortable and there is no immediate need for capital. The bank will look at raising capital only in the next financial year, Mr Sengupta said.

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PSBs extend home loan tenure up to 30 yrs

Fearing credit turning bad assets in the wake of high interest rates, a number of state-run banks, led by State Bank of India (SBI), have decided to raise home loan tenures to 25-30 years or till the borrower touches 70 --well past their working age.

Earlier, the Finance Ministry had written to all public sector banks to increase the tenure of loans instead of raising EMIs in the light of rising interest rates.

SBI took the lead and has reportedly decided to extend the tenure of home loans by 10 years or up to 30 years, while others are doing this on request.

"We have decided to increase the home loan tenure by up to 10 years to 30 years and up to the age of 70, depending on the customer profile. Our Managing Director (S Krishna Kumar), is likely to announce this tomorrow," a senior SBI official told PTI, requesting anonymity.

Fearing more bad loans in the system as interest rates kept on rising following tight monetary policy being under taken by RBI, the Finance Ministry had recently written to the public sector banks (PSBs) to increase the loan tenure instead of increasing the monthly repayment (EMI) amount.

However, all the banks that PTI contacted for reaction on the issue, said this guideline has been in existence for many years now and they had been implementing it on case to case basis.

Over the past 19 months, the RBI has increased policy rate by 325 basis points (one basis point is one-hundredth of a per cent) to 8.25% to batten down stubbornly high inflation, which stood at 9.72% in September.

Generally, home loans are scheduled for 20 years and in some cases up to 25 years, if the borrower will not be retiring by then at 65.

Source: Business Standard

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Central Bank to open 101 branches on single day

Pune, Oct. 21: The Central Bank of India will open 101 new branches across the country on December 21, 2011 to mark completion of 100 years of its existence.

The bank also plans to open new ATMs to take their number all over India to 2011, Mr Mohan Vasant Tanksale, Chairman & Managing Director of the bank, said.

On his maiden visit to its Pune Zonal Office, Mr Tanksale said that the western part of Maharashtra held vast potential for increasing business. More customer-friendly products and facilities are in the pipeline and will be launched shortly, he added.

Ms Sandhya Dalal, Head Cashier of Bajaj Residential Area Branch, who foiled an attempt of dacoity at the branch by her presence of mind, was felicitated by the CMD during his visit.

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IDBI Bank scouting for partners to float infra debt fund

Mumbai, Oct. 21: Public sector lender IDBI Bank is in talks with various financial institutions, including other state-owned banks, to float an infrastructure debt fund, a top official has said.

“We are in talks with various financial institutions to float an infrastructure debt fund after the recent approval of the Reserve Bank allowing banks to launch such funds,” Executive Director, Mr Melwyn Rego, told PTI here.

He, however, declined to name the institutions, or give information about the corpus of the proposed fund.

However, sources said the bank is in talks with its public sector peers, including Corporation Bank, and pure-play infra finance company, India Infrastructure Finance Company.

On September 24, the RBI allowed banks and non-banking finance companies (NBFCs) to sponsor the IDF, which can be set up as mutual funds and NBFCs.

As per the central bank guidelines, IDFs that can be set up as NBFCs should have a minimum net-owned fund of Rs 300 crore and a capital adequacy ratio of 15 per cent.

During the Twelfth Plan (2012-17), the Government plans to spend around $1 trillion (Rs 50 lakh crore) to fund infrastructure, which is almost double that of the Eleventh Plan infra expenditure.

Banks' total infrastructure lending aggregated Rs 5,52,682 crore by the end of June quarter this fiscal.

IDBI Bank, which draws its lineage from infra funding as a development finance bank, has earlier evinced interest to set up such debt funds and is expected to ramp up its lending to this segment through the specialised fund.

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PNB to offer discounts on gold coins

New Delhi, Oct. 21: As part of its ongoing festive season campaign, Punjab National Bank (PNB) has decided to offer discounts on the gold coins sold by it. The quantum of discount would depend upon the weight of the coins purchased, Ms Usha Ananthasubramanian, Executive Director, PNB, said in a statement.

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SBI to decide on overseas bonds issue shortly

Mumbai, Oct 21: State Bank of India, which was downgraded by ratings agency Moody’s recently, on Friday said it will decide on an over $500 million bonds issue next month.

“That’s a call we would be taking in November...whether to go for it at all, and if we do decide to go in, then the extent of the amount,” said Mr Hemand Contractor, Managing Director for International Banking.

He said it would be a “benchmark issue”, which normally means the minimum issue size would be at least $ 500million.

The bank had earlier announced that it would double its MTN borrowings to shore up the tier—II capital to $10 billion this fiscal.

The SBI Chairman, Mr Pratip Chaudhuri, in September, had hinted at raising over $1 billion in November but sounded sceptical following the downgrade by Moody’s.

On October 4, Moody’s Investors Service had cut rating on SBI’s financial strength to D+ from C— and pointed to issues with asset quality and lower capital adequacy.

The bank’s core tier—I capital stood a low 7.6 percent as of the June quarter.

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Central Bank launches direct taxes payment facility

New Delhi, Oct. 21:Central Bank of India has launched a direct taxes payment facility through the bank's ATM network. This facility was inaugurated by Mr C. R. Sundaramurti, Controller General of Accounts, at the bank's Connaught Circus branch in the Capital on Thursday.

Speaking on the occasion, Mr Sundaramurti urged banks to provide IT-enabled services so as to make banking a hassle-free experience for all. Mr M. V. Tanksale, Chairman and Managing Director of the bank, and Executive Directors, Ms V. R. Iyer and Mr R. K. Dubey were present on the occasion.

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Credit card fraud: HDFC duped of Rs 35 lakh

New Delhi: ‘They floated fictitious firms, roped in man who conducted credit card verification for the bank’

Eight persons were arrested by the Delhi Crime Branch for their alleged role in carrying out a credit card fraud operation from Prashant Vihar. The accused persons, divided into two gangs, reportedly siphoned off close to Rs 35 lakh from leading private banks, police said.

“Sunder Kumar, Vikas Malik, Jitender Gulati, Raj Karan, Paramjit Singh, Ashok Kumar, Pramod Kumar and Hari Prakash were arrested on Wednesday following a complaint by HDFC bank,” said Deputy Commissioner of Police (Crime) Ashok Chand. While Kumar and Malik ran one gang, Gulati, Karan and Singh managed the other. The other three members were common to both gangs.

According to police, the gang led by Sunder Kumar floated a fictitious company in the name of ‘Comviva Technologies’ operating from Prashant Vihar and projected themselves as a firm supplying computer software.

“They then took two Electronic Data Capturing (EDC) machines from HDFC and ICICI Bank. Then on fictitious identities, they forged PAN cards, voter ID cards and Income Tax Returns and applied to the banks for credit cards in the names of fictitious persons” said Chand.

To make sure they could carry out their operations easily, the gang included in their conspiracy Ashok Kumar, an employee of Savvy Management Private Ltd that conducted verifications for HDFC Bank to ensure the genuineness of the credit card applicant.

Following the verification by the company, the bank, believing that the applicant was a genuine person and residing at a verified address, issued the credit cards.

“Since the identity of the person to whom the card was issued as well as the address on which it was issued were fictitious, the accused also involved Pramod Kumar and Hari Prakash, two delivery boys employed with Bluedart Courier Company that delivered the credit cards in this racket” said Chand.

The accused had opened six bank accounts in fictitious names at HDFC Bank and one with ICICI Bank. “After getting these credit cards they would, at regular intervals, swipe them on the EDC machine for different amounts and the money would then get automatically transferred to the bank account of the fraudsters at HDFC Bank” said Chand.

After obtaining the credit cards, the accused got in touch with traders, who for getting 4 to 6 per cent of the transacted amount as commission, swiped these cards in their EDC machines.

“The transacted amount then went to the bank account of the traders. Since there was no actual sale of goods by the traders, they gave the accused 94 to 96 per cent of the transacted amount in cash and retained the remaining with them” said Chand.

The accused had gotten 20 credit cards issued and through these credit cards, they defrauded HDFC Bank of Rs 25 lakh, police said. Apart from this, 18 forged debit cards of various banks, 13 mobile phones, 47 SIM cards and several forged PAN cards were recovered from their possession.

Source: Financial Express

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SBI, Central Bank, Syndicate, Canara extend home loan tenor upto 30 years as rate hikes bite hard

MUMBAI: After goading by the Government and fearing risks to asset quality, a number of state-run banks, led by SBI, Central Bank, Syndicate and Canara, have decided to raise home loan tenors to 25 to 30 years or till the borrower touches 70, well past the working age.

State Bank of India took the lead and has reportedly decided to extend the tenor of home loans by 10 years or up to 30 years, while others are doing this on request.

"We have decided to increase the home loan tenure by up to 10 years to 30 years and up to the age of 70, depending on the customer profile. Our Managing Director (S Krishna Kumar), is likely to announce this tomorrow," a senior SBI official told PTI, requesting anonymity. Kumar, who heads the national banking vertical at SBI, could not be reached for comments.

Fearing more bad loans in the system as interest kept on rising following tight monetary policy being under taken by RBI, the Finance Ministry had recently written to the public sector banks (PSBs) to increase the loan tenor instead of increasing the monthly repayment (EMI) amount.

However, all the banks that PTI contacted for reaction on the issue, said this guideline has been in existence for many years now and they had been implementing it on case to case basis. Over the past 19 months, RBI has increased interest rate by 325 basis points (one basis point is one-hundredth of a percent) to 8.25 per cent to batten down stubbornly high inflation, which stood at 9.72 per cent in September.

Generally, home loans are scheduled for 20 years and in some cases up to 25 years, if the borrower will not be retiring by then at 65. Typically on an average, a 25 bps spike in interest rate can push up EMI for a 20-year loan by Rs 17 per lakh. With regular hikes by RBI, EMIs have been stretched too far.

The RBI has hiked policy rates by 325 basis points since March 2010, following which most banks have raised lending rates by up to 250-300 bps making loans dearer. Central Bank of India Chairman and Managing Director M V Tanksale, too, said his bank is open to requests from the borrowers over increasing loan tenors.

"The important question is the cash flow of the borrower, if it increases, he/she does not require an increase and vice versa. I think this has been a very proactive step on the part of the government to issue such a directive."

When contacted the Mangalore-based Syndicate Bank Chairman and Managing Director B Seth said, "we have always been giving this option to our customers, even before the Ministry's letter. The whole point is to keep our asset quality and we offer such options to customers on request."

Source: EconomicTimes

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PNB completes formalities to buy 30% in Metlife

Punjab National Bank, the country's second-largest public lender, today said it had completed formalities to acquire 30% stake in MetLife and launch of insurance policies is slated to begin on January 14 next year across the country, pending regulatory approval.

"We have completed formalities to acquire 30% stake in Metlife. The launch of insurance business is expected on January 14, 2012, and we expect Rs 100 crore business by selling Metlife life insurance polices in one year," PNB Chairman and Managing Director KR Kamath said.

Asked why Q2 results had not been released, he said it was due to Diwali. "We are right on track and will release it on the first week of November," he said.

Kamath said PNB had fixed an aggregate business target of Rs 6.50 lakh crore for this fiscal. Aggregate business had crossed Rs 5.99 lakh crore by September 2011. It had deposits of Rs 3.40 lakh crore and advances of Rs 3.5 lakh crore.

The bank would increase headcount recruiting 10,000 staff this year, he said.

Kamath said PNB, with 5,400 branches, planned to open 200 more before this fiscal year-end, including 10 in Tamil Nadu.

The bank which has 10 branches abroad, had applied for licences to start branches in Vancouver, Maldives, Dhaka and Brazil. Representative Branches in Shangai and Oslo would soon be upgraded to full fledged branches soon, he said.

Kamath said PNB was growing at 22% year on year. Of the total business, 4% was from overseas operation. "It is mostly in domestic segment that it is growing steadily. International business remained at 4%, but the quantum had increased," he said.

The Capital Adequacy Ratio of 12.5%, against the 9% norms of the Reserve Bank of India.

Networth has enhanced to Rs 21,508 crore this year from Rs 17,723 crore last year, he added.

Source: Business Standard

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RBI may hike rates by 25 bps on Tuesday: RBS

The Reserve Bank of India is likely to go in for another round of rate hike of 25 basis points (bps) when it meets on Tuesday, and then will pause till March, according to a poll by the British lender RBS.

The 10th edition of RBS Clients' Survey, which is the third this fiscal, covered 103 local market participants, including corporates, banks, insurers and mutual funds among others.

"...An overwhelming majority of 67% are sure of a 25 bps hike in the repo rate, and then the RBI pause till March," said RBS India Managing Director & Head, Markets, Ramit Bhasin.

However, 30% of the polled expected the central bank to pause this time around. None expected any change in cash reserve ratio, which is pegged at 6% for almost two years now.

Reserve Bank Governor Duvvuri Subbarao will unveil the second quarter monetary policy on October 25; it is widely expected that he will go for yet another round of tightening.

The central bank has increased its key short-term policy rates a record 12 times since March 2010 to contain runaway inflation that has remained at elevated levels despite the government's discomfort. Core inflation stood at 9.72% in September.

Interestingly, a majority of the industry believes that the country is near the end of the tightening cycle. They also expect the repo rates to be stable at 8.5% in December and March.

On the strength of rupee, majority of those surveyed believed the local unit was likely to trade over 50 against the dollar in the near term, given the weak fundamentals of the economy.

Source: Business Standard

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Mobile, Internet, e-banking - the way to go

In tune with the times, the Thiruvananthapuram-headquartered State Bank of Travancore is setting great store by mobile and Internet-based banking as well as harnessing the e-platform to executing Government business.

Mr P. Nanda Kumaran, who has taken over Managing Director in recent times, says that the mobile banking services are steadily gaining traction and monthly registrations have touched ‘the five-digit mark' over the last three months, compared to the sub-1,000 levels a month earlier.

More importantly, the value of mobile-based transactions has crossed the Rs 1-crore mark a month during this period.

“We expect Internet banking and mobile banking to grow in a big way in the coming months,” he said in an interview.

“One other real success story has been the e-payment of commercial taxes in Kerala, wherein we are seeing around 60,000 Internet transactions worth Rs 900 to Rs 1,000 crore every month.”

The bank has 900 ATMs of our own, which are part of the 25,000-plus State Bank Group network, touching every nook and corner of the country. ATM transactions are growing at around 18 per cent every year at over Rs 1,500 crore worth of transactions every month.

“Going forward, we expect over half of all transactions would be through self-service channels such as ATM, Internet and mobile banking,” Mr Nanda Kumaran adds.

Excerpts:

Could you spell out a road map for the bank which had broken into the Rs 1 lakh-crore territory in December 2010 itself?

The bank is continuing with the steady growth trend in business, with the total turnover touching Rs 1.1 lakh crore at the end of the latest half year.

As the processes in regard to consummating a Rights issue are already apace, it may not be proper to give a forward guidance at this stage, according to the guidelines of Securities and Exchange Board of India (Sebi).

Public sector banks are looking at new opportunities in areas such as financial inclusion, mobile banking and rural banking. What is the outlook for SBT with respect to each?

We have already fulfilled our financial inclusion target by extending banking services to all our allotted villages in Kerala with one branch having been opened in one of the 29 such villages and Business Correspondent/Business Facilitator (BC/BF) services being rolled out in the remaining 28.

Our mobile banking services are steadily picking traction and monthly registrations are touching the five-digit mark over the last three months, compared to the sub-1,000 levels a month earlier.

More importantly, the value of mobile-based transactions crossed the Rs 1-crore mark a month during this period.

We expect Internet banking and mobile banking to grow in a big way in the coming months.

One real success story has been the e-payment of commercial taxes in Kerala, wherein we are seeing around 60,000 Internet transactions worth Rs 900 to Rs 1,000 crore every month.

Innovative new products and services would be a key differential that would separate nimble-footed and result-oriented banks from laggards. How is SBT measuring up?

SBT has always been in the forefront of bringing in innovative and consumer-friendly products to meet the needs of all segments of customers.

It would not be possible to name all of them. Latest initiatives such as selling gold coins and SBT Gold savings scheme are among such in the large array of our products.

I believe our responsiveness and customer-friendly approach will continue to be the key service differentiator.

Have you been able to reach these products to the customers? What has been the overall response to each?

Definitely. The steady growth achieved over the years is sufficient testimony to the attractiveness and acceptability of our products.

Our extensive network of over 600 branches in Kerala and about 200 outside help us to reach out to a variety of customers and cater to their needs.

What steps does SBT contemplate with regard to emerging challenges on the business environment, especially in IT security and risk management?

SBT has always been in the forefront of implementing technology and modern risk management initiatives.

It was among the first pubic sector banks to implement total computerisation of branches in year 2003 and thereafter migrate fully to a core banking system in 2005.

We also migrated to the Basle II framework, ahead of schedule in March 2008 itself.

I am confident that our bank will not be found wanting in being able to cope with the emerging challenges of Basle III and IFRS etc.

How successful has been SBT's efforts at finding the right mix of assisted and self-service channels aimed at providing the best banking experience to customers?

We have 900 ATMs of our own, which are part of the 25,000-plus State Bank Group network, touching every nook and corner of the country.

ATM transactions are growing at around 18 per cent every year at over Rs 1,500 crore worth of transactions every month. As stated earlier, both Internet and mobile banking transactions are growing even faster now.

Going forward, we expect over half of all transactions would be through self-service channels such as ATM, Internet and mobile banking.

Does SBT intend to further broadbase engagement in three different areas of business enterprise which it has strongly involved in, namely (i) road transport operators (ii) cross-selling and (iii) Government business?

We have a significant portfolio in road transport companies/automobile finance, with tie-ups with all major players for financing customers.

We are corporate agents for SBI Life and Mutual Funds, five other mutual funds, United India Insurance and SBI Cards.

Our income from such cross-selling activities has been steadily growing up every year.

In terms of Government business, we are of course Bankers to the Government of Kerala and a majority of Government transactions are routed through us.

We expect to maintain our dominant position in Government business in Kerala in the years to come, with active support of the Government authorities.

During the next half of the financial year, what will be the bank's strategy on lending to (i) agriculture (ii) SME and MSMEs and (iii) retail loans – housing, car and personal?

As already indicated, I preclude myself from making any forward-looking statements at this point in time. Replies on these areas will have to await another day.

Is there a fresh line of thinking on combating the industry trend of deteriorating asset quality? Would you look at a dedicated mechanism to deal with NPAs?

NPAs are part and parcel of banking business. Exercising effective supervision and control over advances is part of our DNA.

We face greater challenge compared to other banks due to the sheer numbers of our retail portfolio.

One of the new initiatives that we have rolled out is the Asset Tracking Centres (ATCs) where we have a technology that enables outbound calls by our personnel to engage with our borrowers over telephone at their landline/mobile numbers and persuade them to remit their dues in time.

This is beginning to have an impact on improving our recoveries painlessly.

Would you have a new look at the gold loan category, especially after an RBI directive on loans sanctioned to NBFCs for on-lending not eligible for classification under priority lending?

We have traditionally been an active player in gold loans, though volumes have been lower compared to the current times. Our gold loan portfolio is growing at a steady clip now.

We have plans to open exclusive gold loan branches at all district headquarters in Kerala shortly. We expect to carve out a greater share of this segment in the coming months.

We do not have had a sizable exposure to on-lending to NBFCs' gold loans. Hence the RBI directive has had limited impact on us.

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YES Bank Q2 net climbs 33%

Mumbai, Oct 20: YES Bank’s net profit increased 33 per cent to Rs 235 crore in the second quarter ended September 30, 2011 from Rs 176 crore in the corresponding quarter last year.

A strong growth of 23 per cent in net interest income and a huge increase of 63 per cent in non interest income helped the bank post good growth during the second quarter, said a press release from the bank.

Total advances rose 13 per cent to Rs 34,194 crore, while deposits rose 10 per cent to Rs 44,076 crore.

The huge growth in non interest income was on the back of strong growth in transaction banking, financial markets and financial advisory business that showed continued traction year-on-year and sequentially, said the press release.

Net interest margin was at 2.9 per cent.

For the six-month period ended September 30, 2011, the net profit increased 36 per cent to Rs 451 crore from Rs 333 crore in the year-ago period.

Shares of YES Bank fell 1.38 per cent to Rs 286, on the BSE, after the results were announced. The Sensex was down by 317 points.

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IDBI Bank to offer loans against IDBI gold ETF

New Delhi, Oct 20: IDBI Mutual Fund is in talks with five major jewellery houses to enable investors to exchange their IDBI Gold ETF units for gold jewellery, a top official of the fund house has said.

If successful, investors in IDBI Gold ETFs will be able to directly buy physical gold jewellery from a jeweller without having to go to a stock exchange for selling their units.

“Some really big jewellery houses have in principle agreed to take our IDBI Gold ETF units and exchange it for gold jewellery. That will be an additional exit option for our investors in Gold ETF units. We will tie-up the modalities in next few days. We are talking to both large national and also regional players,” Mr Debasish Mallick, Managing Director and Chief Executive Officer, IDBI Asset Management said here on Thursday.

Mr Mallick said that IDBI Mutual Fund wants to enter into tie-ups with multiple jewellers for providing an additional exit option to investors.

Such tie-up would be a win-win arrangement for both the jeweller and the fund house, he said.

Mr Mallick was in the capital to announce the launch of IDBI Gold Exchange Trade Fund (ETF), an open-ended ETF. The New Fund Offer (NFO) has opened for subscription on October 19 and will close on November 2.

IDBI Mutual Fund has tied up with Stock Holding Corporation (250 branches), IDBI Capital Services (400 branches), Lakshmi Vilas Bank (271 branches), Corporation Bank (50 branches) and Federal Bank (50 branches) to sell IDBI Gold ETFs. This product will also be retailed through 800 branches of IDBI Bank across the country, Mr Mallick said.

Both IDBI Bank and Manappuram Finance have agreed to provide loans against IDBI Gold ETF units, he added. IDBI Mutual Fund has no immediate plans to launch Gold Fund of Funds.

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Daimler India, HDFC Bank tie-up for commercial vehicle financing

Mumbai, Oct. 20: Daimler India Commercial Vehicles (DICV) has tied up with HDFC Bank for financing its commercial vehicles. The MoU was signed in the presence of Mr Marc Llistosella, Managing Director and CEO, DICV, and Mr Aditya Puri, Managing Director, HDFC Bank.

The first preferred financier for BharatBenz trucks, HDFC Bank will now evaluate the finance needs of the clients and develop appropriate financing packages for BharatBenz customers. “This partnership is another big step as we move towards the market launch of our BharatBenz Trucks. 

This alliance allows us to strengthen our presence as HDFC Bank has a wide network and complements in serving our prospective customers,” Mr Llistosella said. In addition, HDFC Bank will also extend cooperation on the consumer and corporate banking sides across Daimler India entities. HDFC Bank has a network of 2,111 branches in 1,111 cities and 5,998 ATMs in India. DICV, a fully-owned subsidiary of Daimler AG, will roll out trucks in 2012 from its manufacturing facility at Oragadam, near Chennai.

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SBT H1 net down 18.25% on higher provisions

Thiruvananthapuram, Oct. 20: State Bank of Travancore has posted a negative growth of 18.25 per cent in net profit during the first half of 2011-12 compared to the corresponding year-ago period.

A meeting of the board of directors held here on Thursday took on record the performance of the bank during and up to the end of the second quarter.

HIGHER PROVISIONS

The net profit for the half-year stands at Rs 256.20 crore against Rs 313.40 crore for the half year ended 30th September 2010.

The net profit has been impacted by higher provisions for standard assets as mandated by the Reserve Bank as also because of further slippage of assets.

Gross NPAs stood at 2.84 per cent (2.02 per cent a year ago, adding 40.59 per cent) and net NPAs were at 1.77 per cent (1.17 per cent, up by 51.28 per cent).

But the excess provisioning also helped the bank meet the RBI requirement of achieving 70 per cent Provision Coverage Ratio by March this year.

Meanwhile, operating profit was up 9.06 per cent at of Rs.580.40 crore during the first half of this year against the year-ago position.

MODERATE GROWTH

The growth here too was moderate due to increase in interest expenditure from market-related rates and higher growth in deposits as compared to the growth in advances.

Net operating income has improved by 10.65 per cent to Rs 1,173.12 crore, while net interest income looked up 7.91 per cent to Rs.874.21 crore at the end of the first half year.

Net Interest Margin stood at 2.63 per cent, a trifle less than 2.86 per cent of September 2010.

COST OF DEPOSITS

Total non-interest income increased to Rs 298.91 crore as against Rs 250.02 crore during the corresponding period in the previous year. Higher profits from treasury operations boosted the non-interest income for the period.

The cost of deposits has increased to 6.56 per cent, 101 bps more than a year ago, while yield on advances has also improved by 110 bps to 10.54 per cent.

The Capital to Risk Weighted Assets Ratio (CRAR) stood at 12.18 per cent (under Basel II framework) as against 12.93 per cent a year ago. The regulatory minimum prescribed by the Reserve Bank is 9 per cent.

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Dhanlaxmi Bank net more than doubles in Q2

Mumbai, Oct. 20:Dhanlaxmi Bank's net profit more than doubled to Rs 4.35 crore in the quarter ended September 30, 2011, from Rs 1.62 crore in the same period last year.

The surge in profit was on the back of strong growth in net interest income (Rs 68 crore) and other income (Rs 44 crore), healthy recovery in bad assets (Rs 17 crore) and write-back in provisioning (Rs 5.30 crore).

Gross NPAs were lower at Rs 56 crore (Rs 90 crore) and the gross NPA ratio fell substantially to 0.55 per cent (1.26 per cent).

The lower NPA has helped the bank to improve the provision-coverage ratio to over 70 per cent from 45 per cent, without actually making higher provisions, said Mr Bipin Kabra, Chief Financial Officer, Dhanlaxmi Bank.

The growth in profit is also on account of increase in overall business. “Going ahead we will continue to grow at higher than industry average due to our low base. But we will not grow at 70-80 per cent growth as was seen earlier. We will see 25-30 per cent growth,” Mr Kabra said.

The bank would be looking to raise capital soon in order to meet the targeted growth, he added.

Managing Director and CEO, Mr Amitabh Chaturvedi, had recently said the bank is planning to raise equity capital by December to shore up its capital-adequacy ratio and support expansion plans.

In May 2011, the old generation private sector bank had announced that it will be raising Rs 1,000 crore in FY-2012.

Shares of Dhanlaxmi Bank closed at Rs 64.15, up 0.55 per cent on the BSE, on Thursday.

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SBI's net interest margin will be over 3.5% this fiscal, says MD

Kolkata, Oct. 20:State Bank of India hopes to achieve a net interest margin (NIM) of over 3.5 per cent in the second quarter as well as for the whole year. The rise in margins will be despite the pressure on interest rates, said its Managing Director and Chief Financial Officer, Mr Diwakar Gupta.

“We had given a guidance of maintaining our margins at 3.5 per cent this year. We have shown a healthy growth in NIM so far and hope to do better than what we had targeted at the beginning of the year,” Mr Gupta told newspersons on the sidelines of a banking colloquium organised by CII here on Thursday.

The bank's margins improved to 3.6 per cent (3.15 per cent) during the first quarter of current fiscal. Explaining the logic behind the expected rise in margins, Mr Gupta said, “The cost of deposits is not likely to rise over the next few months, so the margins will be higher on account of rising yields on advances.”

State Bank will desist from rising interest rates. “We want to keep rates as much under control as we can as credit is already very expensive,” Mr Gupta said.

The margins could be around 3.6 per cent this year. The rise in margins will help boost the bank's profitability, he pointed out. The bank is set to announce its second quarter results by the first week of November.

Tier-I capital

State Bank will require about Rs 7,800 crore to take its Tier-1 (equity) capital to 8 per cent by March 2012 as per Reserve Bank of India's guidelines. The Tier-1 capital was 7.6 per cent as on June 30, 2011.

Fund infusion by the Government will help the bank in raising its Tier-I capital. Moody's recently downgraded the bank's standalone rating due to poor Tier-I capital ratio and deteriorating asset quality.

Capital infusion

Replying to a query regarding the status of its proposed rights issue, Mr Gupta said that the Government had given a clear message that it would infuse funds into the bank. “Certainly funds should come in this fiscal. This can be by way of rights issue, follow-on public offer, private placement or even through the issuance of global depository receipts,” Mr Gupta said.

State Bank will need funds to the tune of Rs 17,000 crore over the next one year and Rs 26,000 crore over the next three years.

The bank's credit growth has been moderately higher than that of the industry. “We had a guidance of achieving a credit growth of 16 per cent this year and we are not revising it,” he said.

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RBI norms for new bank licences likely by Nov-end: FinMin

The Reserve Bank of India (RBI) is likely to come out with guidelines on allowing new private banks by November end, Financial Services Secretary DK Mittal said today.

"The RBI is actively working on the guidelines...And is likely to come out with the final licencing norms by November," he told reporters on the sidelines of the Economic Editors conference here.

The RBI had in August released the draft guidelines on allowing industrial houses to promote banks.

As per the draft norms, private sector entities or groups owned and controlled by Indian promoters, with diversified ownership, sound credentials and integrity, and having successful track record of at least 10 years, would be eligible to promote banks.

Earlier this week some Members of Parliament (MPs) had expressed reservations at a meeting of Standing Committee over the RBI's proposal to grant banking licences to industrial houses arguing that it would not promote financial inclusion.

The draft norms on bank licences have pegged the minimum required capital for promoting bank at Rs 500 crore and restrict foreign shareholding at 49% for the first five years.

On implementation of the Shyamala Gopinath committee report on small savings scheme, Economic Affairs Secretary R Gopalan said,"final decision will be taken shortly."

The Committee had suggested that the returns on small savings scheme be aligned the market rates and post office savings scheme interest rate be raised to 4%.

According to government estimates, small savings during the first quarter (April-June) of the current fiscal declined by Rs 26,542 crore. They had increased by Rs 13,250 crore in the same period last year.

Source: Business Standard

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Festive season fails to boost growth in loans

The festive season has failed to cheer banks, with the growth in loans showing no signs of picking up, amid high interest rates. Credit growth, on a year-on-year basis, fell to 19.45 per cent from a high of 21.5 per cent during the beginning of the financial year. What makes matters worse is loans saw negative growth in the first week of October, falling by Rs 68,533 crore.

Deposit growth, on the other hand, improved this financial year, standing at 17.36 per cent on a year-on-year basis. However, it fell by nearly Rs 83,000 in the first week of October.

"Borrowers, both retail as well as corporate, expect some stabilisation in interest rates. Once that happens, credit growth is expected to pick up in the busy season," said N Seshadri, executive director, Bank of India.

The fall in the first week of October follows the robust growth in the last week of September, as banks shore up their balance sheets to meet quarterly targets. In the last week of September, loans grew by Rs 1.24 lakh crore, while deposits rose by 1.77 lakh crore.

According to P Sitaram, chief financial officer, IDBI Bank, the drop in outstanding credit is on account of the unwinding of short-term corporate credit. "This is the trend seen at the end of every quarter. There is also a genuine slowdown in demand, reflecting the moderation in economic growth," he said.

The incremental credit-deposit ratio, which reflects the amount banks lend for every rupee deposit, fell to 55 per cent in the first six months of the current financial year from 76 per cent recorded in the same period of the previous financial year.

The slackness in credit growth is due to rate rises by the central bank. The Reserve Bank of India (RBI) is expected to raise the rate by 25 basis points in its next policy review.

Banks which has responded to the central bank's rate rise had increased their benchmark lending rates by 250-275 basis points in the last 15 months. RBI has scaled down its 2011-12 credit growth target from 19 per cent to 18 per cent, while maintaining the deposit growth target at 17 per cent. Bankers said RBI may further lower the banks’ credit growth projection during the policy review next week.

Source: Business Standard

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Reserve Bank of India warns of another global financial crisis

MUMBAI: Reserve Bank of India (RBI) has warned of another financial crisis brewing, as global liquidity becomes a concern amidst central banks pegging their lending rates at near zero levels, leaving scope for another asset bubble to take down the global financial system.

"There is, thus, incontrovertible evidence that there is yet again a huge under-pricing of risks in the financial system and, therefore, it is not a question of if, but when, the generic asset bubble caused by manifold increases in balance sheets of central banks will burst," said RBI, executive director, VK Sharma in his address in Singapore on 'Identifying Systemic Risks in the Global Markets - Lessons Learnt from the Crisis'. He spoke about what has been done by Asian central bankers in detecting and mitigating risks of future crises similar to the one in 2008-09.

One of the major worries this time around, which did not exist back then, is global liquidity, Sharma said. Balance sheets of major banks have grown by almost three times from pre-2007 levels, while near-zero policy rates have added $4 trillion in incremental central bank liquidity. Sharma mentioned that the US has been keeping excess reserves of about $1.5 trillion with the Federal Reserve rather than lending it to small businesses and households.

"Alongside, non-financial corporations in the US are reportedly sitting on cash and liquid assets worth $2 trillion which they do not know what to do with it. In this background of huge deluge of global liquidity, there are unmistakable signs of asset bubble inflating again in almost a replay of the last global financial crisis." Sharma said.

"In India, we have had remarkable financial stability, not fortuitously, but thanks to pre-emptively and pro-actively delivered prudential measures like increase in risk weights for exposures to commercial real estate, capital market, venture capital funds and systemically important non-deposit accepting NBFCs.

Source: EconomicTimes

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Now, NRIs can hold accounts in any currency

Mumbai: The Reserve Bank today said Indians who have non-resident accounts in the country can now hold them in any currency which is fully convertible.

The move is likely to help NRIs/Persons of India Origin as it will give them more options in the holding of accounts, and lessen the risk from fluctuations in major currencies.

Earlier, FCNR(B) account holders were allowed to hold accounts in only certain currencies such as the Pound Sterling, US dollar, Japanese yen, euro, Canadian dollar and Australian dollar.

"It has been decided that Authorised Dealer banks in India may be permitted to accept Foreign Currency (Non-Resident) Account (Banks) deposits in any permitted currency.

It may be noted that 'Permitted currency' for this purpose would mean a foreign currency which is freely convertible," RBI said in a notification.

"The Committee to Review the Facilities for Individuals under Foriegn Exchange Management Act, 1999 in its Report has recommended that FCNR(B) accounts may be permitted to be opened in any freely convertible currency," RBI said.

RBI also said that any citizen who was earlier residing in a foreign country can own or transfer property or other assets in that nation if it was acquired during the time of his residence there.

"... a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India," RBI said.

In a clarification issued by it regarding repatriation of income and sale proceeds of assets held abroad by NRIs who have returned to India permanently, RBI said an investor can retain and reinvest the income earned on investments made under the Liberalised Remittance Scheme.

The apex bank said that clarifications are as per relevant sections of the Foreign Exchange Management Act of 1999.

Source: Financial Express

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Axis Bank to start Sri Lanka operations

COLOMBO: India's No.3 private lender Axis Bank has been granted a banking licence in Sri Lanka and will start operations at its first branch this week, the island nation's central bank said on Wednesday.

Central Bank Governor Ajith Nivard confirmed Axis Bank is the fifth Indian bank licensed to operate in Sri Lanka.

"They are starting on Friday and they will do all banking business. Initially they will open one branch and then they will have to make an application for anything they will want," Cabraal told Reuters.

The bank posted a net profit growth of 27 percent to 9.4 billion Indian rupees ($191.2 million) in the June quarter.

Axis Bank is the fifth Indian bank to enter Sri Lanka, hoping to catch a piece of the growing economy after the end of a three-decade civil war in 2009. The State Bank of India, Indian Bank , ICICI Bank , and Indian Overseas Bank are already in Sri Lanka.

Earlier this year, Indian Bank opened a branch in Sri Lanka's northern city of Jaffna, in the former war zone, aiming to get a piece of the growing post-war reconstruction lending pie.

Source: EconomicTimes

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Federal Bank opens 66 new branches

KOCHI Alwaye-based Federal Bank has announced the opening of 66 new branches on Tuesday. Speaking to ET, CEO and MD Shyam Srinivasan, Federal Bank explained that the way forward for Federal Bank was to scale up on its strength in new territories. Of the new branches, 12 are in Gujarat, 10 in Karnataka, nine in Tamil Nadu and six in Maharashtra.

Source: EconomicTimes

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RBI grants pan-India licence to J&K State Cooperative Bank for biz activities

SRINAGAR: The Reserve Bank of India has granted a licence to Jammu and Kashmir State Cooperative Bank to carry out business activities in any part of the country, an official spokesperson of the state government said today.

Minister of State for Cooperatives, Finance & Planning Manohar Lal Sharma announced the grant of licence by the RBI at a high-level meeting of bank officers here yesterday, according to the spokesperson.

"It is a matter of pride for the state to get the (RBI) licence for a public sector bank," Sharma said, expressing hope that the bank will be able to expand its activities into other parts of the country besides Jammu and Kashmir.

"This is an indication of excellent performance of the bank, which has paved the way for granting the licence," the minister asserted.

He directed J&K State Cooperative Bank Managing Director to speed up efforts to promote the business activities of the bank.

The minister asked him to identify potential areas for establishment of more branches so that the network of the bank can be strengthened.

Source: EconomicTimes

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