ICICI Bank signs $300 mn loan deal with Japan banks

Japan Bank for International Cooperation (JBIC) and Sumitomo Mitsui Banking Corp (SMBC) completed a $300 million loan deal for ICICI Bank, JBIC said in a statement on Friday.

JBIC is providing $180 million, while SMBC and Bank of Tokyo-Mitsubishi UFJ are funding $120 million. The commercial portion is guaranteed by JBIC, it said.

JBIC and SMBC were the arrangers to the deal.

The funds will be used to support renewable energy and energy efficiency projects in India.

In March 2011, the borrower got 15.3 billion yen loan and a $200 million loan from Japan.

Source: Business Standard

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Govt to infuse Rs 18,000 cr in 12 PSU banks

The finance ministry will be infusing Rs 18,000 crore in the current financial in 12 banks, including the State Bank of India (SBI), and will be seeking supplementary grants from Parliament in the Budget session.

"There are 12 banks in which we will infuse money in 2011-12. The amount will be Rs 18,000 crore. This includes Rs 7,900 crore for State Bank of India (SBI)," sources said.

Besides SBI, other lenders that would be given capital support in the fiscal include Punjab National Bank, Central Bank of India andThe finance ministry will be infusing Rs 18,000 crore in the current financial in 12 banks, including the State Bank of India (SBI), and will be seeking supplementary grants from Parliament in the Budget session.

"There are 12 banks in which we will infuse money in 2011-12. The amount will be Rs 18,000 crore. This includes Rs 7,900 crore for State Bank of India (SBI)," sources said.

Besides SBI, other lenders that would be given capital support in the fiscal include Punjab National Bank, Central Bank of India and Bank of Baroda.

The government would seek supplementary demands for grants to the tune of Rs 14,000 crore for recapitalising PSU lenders in the Budget session, which is likely to begin sometime next month.

Earlier this week, the government had approved capital infusion of Rs 7,900 crore in State Bank of India (SBI) and Rs 1,285 crore in PNB through preferential issue of shares.

The capital infusion in banks would help the lenders increase their business.

Most of the public sector banks got capital support from the government last fiscal. These include Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.


Source: Business Standard

The government would seek supplementary demands for grants to the tune of Rs 14,000 crore for recapitalising PSU lenders in the Budget session, which is likely to begin sometime next month.

Earlier this week, the government had approved capital infusion of Rs 7,900 crore in State Bank of India (SBI) and Rs 1,285 crore in PNB through preferential issue of shares.

The capital infusion in banks would help the lenders increase their business.

Most of the public sector banks got capital support from the government last fiscal. These include Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.

Source: Business Standard

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IRDA forms Health Insurance Forum for consultation

The Insurance Regulatory and Development Authority has formed a Health Insurance Forum to act as a consultative body for all stakeholders.

“In view of the growth in the health insurance industry, it is necessary to create a forum for an effective dialogue between hospitals, insurance companies, third-party administrators and consumer,” Mr J. Hari Narayan, Chairman, IRDA, said in an order issued here.

Role of forum

The functions of the forum will be to advice and assist the regulator in evolving health insurance regulations and facilitate the creation and adoption of standard processes and definitions in health insurance.

The members of the forum would include six chief executive officers of insurance companies, and representative of the Ministry of Health and Family Welfare.

Each nominated member will have a term of two years, and the forum is expected to meet at least twice a year, Mr Hari Narayan said.

nagsridhu@thehindu.co.in

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Lakshmi Vilas Bank net rises 10.35% in Q3

Lakshmi Vilas Bank has registered a 10.35 per cent increase in net profit in the quarter ended December 2011 compared to the corresponding year-ago period.

The bank's net profit rose to Rs 28.35 crore (Rs 25.69 crore) and its total income was up 49 per cent at Rs 429.49 crore (Rs 287.57 crore).

However, compared to the 49 per cent growth in its total income, the total expenditure swelled 66.4 per cent to Rs 381.38 crore (Rs 229.09 crore).

Higher expenditure

Explaining the reason for the significant increase on the expenditure side, LVB's Chief Executive, Mr P. R. Somasundaram, told Business Line that it was on account of increased spending on ATM network and manpower.

The bank hired around 425 people during the third quarter of 2011-12 as against around 160 during the corresponding quarter of the earlier fiscal. The quarter also witnessed aggressive expansion of its ATMs to 509.

“Coupled with the intake of people, there has also been a rise in the dearness allowance. Further, this addition has happened only at the fag end of the quarter. Going forward, it will stabilise and we see returns on our investments,” he added.

Total deposits registered a year-on-year growth of 33.4 per cent to touch Rs 13,281 crore, while the gross credit expansion (YoY) was up 35 per cent at Rs 9,344 crore.

While gross NPAs (non-performing assets) declined to 2.42 per cent from 2.98 per cent during the corresponding third quarter of the earlier fiscal, they are more than the 2.24 per cent in the quarter ended September 2011.

Mr Somasundaram admitted to a slight slippage in the NPA level, but maintained that there was ‘no serious impairment'.

To boost its capital-adequacy ratio to around 13.6 per cent from 10.82 per cent as at end-December 2011, the bank has raised Tier-II bonds worth Rs 250 crore.

lnr@thehindu.co.in

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IRDA to make health cover for HIV patients mandatory

HIV/AIDS patients, doctors and nurses who are vulnerable to the infection can look forward to health insurance cover soon.

At present, health insurance cover is not being provided to these categories of customers.

In an exposure draft released on Friday, the Insurance Regulatory and Development Authority has asked all life and general insurers to put in place an underwriting policy on health insurance coverage for persons suffering from HIV.

“The Authority has received representations from various stakeholders, including public bodies and the Government, to provide insurance cover to people living with HIV and to those who are vulnerable to it in health insurance policies,'' Mr J. Hari Narayan, Chairman, IRDA, said.

The insurers should indicate the general eligibility criteria for extending health cover under this category by specifying the stages of infection and compliance with treatment protocols.

They should also identify all possible risks and those risks which would be denied.

All the product designs would be examined and approved by the regulator in accordance with file and use procedures.

IRDA proposes to implement this order from October 1, 2012.

nagsridhu@thehindu.co.in

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Manappuram Finance net jumps 117% in Q3

Thrissur-based Manappuram Finance Ltd has registered a 117 per cent increase in its net profit in the third quarter of the current fiscal ending December 31, 2011, touching Rs 161.37 crore against Rs 74.53 crore in the corresponding quarter of last year.

The net profit for the nine months up to December also rose, by 124 per cent to Rs 404.50 crore (Rs 180.86 crorein the comparableyear-ago period).

The board has also approved an interim dividend of Re 0.50 per share. Mr V. P. Nandakumar, Executive Chairman, said that the aggregate gold loan disbursements during the quarter increased to Rs 10,371.80 crore ( Rs 5,575.24 crore).

Accordingly, the company registered a growth of 90 per cent in its total assets under management (AUM), which went up to Rs 12,358.21 crore from Rs 6,516.15 crore in the third quarter of last fiscal, he said.

The operating income moved up by 120 per cent to Rs 726.40 crore (Rs 329.63 crore).

The PBT for the quarter increased to Rs 239.54 crore (Rs 111.49 crore), while provision for income-tax stood at Rs 78.17crore (Rs 36.96 crore).

The company has also opened 235 new branches during the quarter, taking its national network to 2,738 spread across 20 States and four Union Territories.

A net of 1.41 lakh customers were added during the quarter, extending the total customer base to 16.60 lakh.

sajeevkumar@thehindu.co.in

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SBM net profit down 15.98% in third quarter

State Bank of Mysore registered a net profit of Rs 110.94 crore in the third quarter of 2011-12 against Rs 132.04 crore in the corresponding period of the previous fiscal, recording a decline of 15.98 per cent.

The net profit for the first nine months of the current financial year stood at Rs 253 crore as against Rs 336.79 crore in the corresponding period of the previous fiscal.

The net interest income of the bank during the third quarter stood at Rs 413.42 crore (Rs 443.79 crore).

However, ‘other income' of the bank registered a growth, at Rs 106.88 crore (Rs 97.17 crore).

Non-performing assets (NPAs) also increased during the quarter.

The gross NPA stood at 3.67 per cent (3.20 per cent), and net NPA, 1.73 per cent (1.47 per cent).

The provisions for NPAs amounted to Rs 60.81 crore (Rs 85.68 crore) during the quarter.

On Thursday, the scrip closed at Rs 520 on the BSE against the previous closing of Rs 528.65.

vinayakaj@thehindu.co.in

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Sunil Kaushal is new head of StanChart India

Standard Chartered Bank has appointed Mr Sunil Kaushal as the Regional Chief Executive, India and South-Asia. He has taken charge from Mr Neeraj Swaroop, who will relocate to Singapore as Regional Chief Executive for South-East Asia (excluding Singapore).

Before taking the helm of India's largest foreign bank, Mr Kaushal was President and CEO of Standard Chartered Bank, Taiwan. He joined Standard Chartered in Dubai in 1998 and has since held several senior roles in Consumer and Wholesale Banking.

In his new role, Mr Swaroop will have governance oversight for Australia, Brunei, Indonesia, Malaysia, Mauritius, Philippines, Thailand and Vietnam.

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Andhra Bank Q3 profit dips 8.5% on higher provisioning

Andhra Bank reported a 8.5 per cent dip in net profit at Rs 303 crore in the third quarter ended December 31, 2011, compared with Rs 331 cr in the year-ago period.

“The decrease in net profit was due to increase in provisions because of restructuring of some accounts,” Mr B. A. Prabhakar, Chairman and Managing Director, Andhra Bank told newspersons here on Thursday.

A bulk of restructuring was done in the telecom sector. Including the Rs 1,150 crore of restructured loans during the quarter under review, total restructured portfolio stood at Rs 3,500 crore as on December 31, 2011.

Some more corporate accounts are likely to be restructured in the current quarter. “But it will not be of this magnitude,” Mr Prabhakar said.

The key financial indictors of the bank are as follows: net non-performing assets have gone up to 1.21 per cent from 0.47 per cent last year; the total income is up by 36 per cent at Rs 3,158 crore; the net interest income grew by 17 per cent to Rs 984 crore; the earnings per share stood at Rs 5.42 (Rs 6.82); and the total business increased by 20.4 per cent to Rs 1,77,850 crore.

OUTLOOK

For the full year, the net interest margin might come under pressure, Mr Prabhakar said. “It may come down by 10-15 basis points.”

The net interest margin for the third quartet stood at 3.81 per cent against 3.84 per cent in the quarter ended September 2011.

The growth in credit and deposits could be 15-16 per cent and 18 per cent, respectively, he said.

Andhra Bank will be hiring 1,450 clerks and 820 officers for the next financial year.

nagsridhu@thehindu.co.in

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Corp Bank net up 5% in Q3

Higher cost of deposits, and provisions for loans and investment depreciation tempered Corporation Bank's net profit in the October-December 2011.

The public sector bank's net profit nudged up by 5 per cent to Rs 402 crore, against Rs 382 crore in the corresponding year-ago period.

In the reporting period, cost of deposits increased to 7.64 per cent (5.72 per cent in the October-December 2010 period).

While provisions for bad and doubtful debts increased by 22 per cent to Rs 440 crore (Rs 360 crore), that for investment depreciation jumped by 460 per cent to Rs 140 crore (Rs 25 crore).

According to Mr Ajai Kumar, Chairman and Managing Director, the thrust of the bank will be to grow the loan portfolio in the retail, small and medium enterprises, and agriculture segments.

Due to the relatively low current account, savings bank account (CASA) deposit base of 21 per cent (of total deposits), cost of deposits has come under pressure. The bank plans to increase the CASA base to 30 per cent in the next couple of years, said Mr Kumar.

To increase the CASA base and expand loan portfolio, the bank will open branches at the rate of 200 every year. Currently, the bank has 1,431 branches.

“We will step up recoveries, and increase focus on upgradation of assets and credit monitoring,” said Mr Ajai Kumar.

Aviation sector exposure

According to Mr Ashwani Kumar, Executive Director, Corporation Bank, the bank has an exposure aggregating about Rs 1,600 crore to Air India (Rs 1,300 crore) and Kingfisher Airlines (Rs 300 crore). The exposure to these distressed airlines accounts for just 1.73 per cent of the total advances of Rs 92,378 crore as at December-end 2011.

The bank is hopeful that a debt-restructuring mechanism for the national carrier will soon be hammered out so that banks' asset classification is not impaired. It has already downgraded the asset classification of Kingfisher Airlines to the sub-standard category.

Shares of Corporation Bank shares closed 0.05 per cent up at Rs 416.05 on the BSE on Thursday, against the previous close of Rs 415.85.

kram@thehindu.co.in

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NHAI bond helps banks expand current account deposits

The euphoria over the National Highways Authority of India’s (NHAI) bond issuance not only allowed the public sector entity to raise money for financing its operations, but also benefited banks by helping them expand their low-cost deposit base.

While mobilisation of CASA (current account savings account) deposits has been challenging for banks in the current environment of high-term deposit rates, the current account balances of top lenders like ICICI Bank, HDFC Bank and Axis Bank increased in the last quarter — primarily because of flows related to NHAI bonds.

For ICICI, the country’s largest private-sector lender, the growth in current account deposits in the third quarter nearly doubled from a quarter ago. In October-December, the bank added Rs 7,042 crore deposits in the current account compared with Rs 3,220 crore in the previous three months.

In comparison, the growth in the bank’s savings deposits in the last three months has been slower. It added Rs 3,349 crore savings deposits in the previous quarter.

“The increase in current account deposits included the impact of greater float on account of NHAI bond issuance related flows,” said a senior executive of ICICI Bank after the lender announced its third quarter earnings yesterday.

It has also helped ICICI Bank improve its CASA deposits’ share in total deposits to 43.6 per cent as of December-end, from 42.1 per cent a quarter ago. For 2011-12, the bank expects to maintain the average CASA ratio at about 40 per cent. Rival HDFC Bank, too, has benefited from the exuberance related to NHAI bonds. The bank is believed to have received around Rs 4,000 crore of current account deposits that were related to NHAI bond issuance.

The bank in its third quarter earnings release had said core CASA deposits “adjusted for one-off current account balance of approximately Rs 4,000 crore was at 47.7 per cent of total deposits as at December 31, 2011”.

Even for Axis Bank, the NHAI bond issuance appears to have aided the lender’s current account deposits. The private-sector bank’s current account deposits rose 47 per cent year-on-year last quarter, while savings deposit growth was only 21 per cent. The CASA ratio of the bank improved to 42 per cent as of December-end.

Analysts and bankers said other large lenders, including State Bank of India (SBI), are likely to have witnessed growth in current account deposits primarily because of NHAI’s bond issuance. SBI is yet to detail its third quarter earnings.

It was in December last year that the Rs 10,000-crore bond issuance of NHAI opened for subscription. The bonds were oversubscribed by 2.5 times. In other words, investors put Rs 25,000 crore in banks to subscribe these bonds. The banks will now refund Rs 15,000 crore to investors.

Source: Business Standard

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UCO Bank expects govt to infuse Rs 200-300 cr capital by March

State-owned Uco Bank expects the government to infuse Rs 200-300 crore by March to help the lender meet 8 per cent Tier-I capital requirement.

"The exact amount is not yet known but we are expecting anywhere between Rs 200 and Rs 300 crore by March to meet the eight per cent tier-I capital," Uco Bank Chairman and Managing Director Arun Kaul said today.

The bank's capital in December slipped to 7.79 per cent. The capital adequacy ratio, or CAR (as per Basel II norms), during the October-December quarter was 12.33 per cent, down from 13.02 per cent in the same period last fiscal, he said.

Uco bank also received capital infusion by the government in 2010-11.

The CRR cut by Reserve Bank of India will release some Rs 600 crore for the bank, he added.

Speaking about the change in interest rates, Kaul said there was no scope unless cost of funds reduces.

"In the December quarter, cost of funds jumped by 180 basis points while recovery was just to the tune of 145 points," he said.

Source: EconomicTimes

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Rs 1,000 denomination banknotes to be issued non-sequentially: RBI

The Reserve Bank today said it will soon start issuing banknotes of Rs 1,000 denomination in non-sequential numbering.

The packets of banknotes in non-sequential number will have hundred notes, the apex bank said in a statement.

In June last year, RBI had started issuing Rs 500 denomination notes in non-sequential numbering.

"It has now been decided to issue banknotes of Rs 1000 denomination also on similar lines," the statement said.

The bands of the packets containing the banknotes in non-sequential number will be superscribed with the words 'the packet contains 100 notes not numbered sequentially'.

Source: Financial Express

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UCO Bank net profit rises 11% in Q3

Kolkata-based UCO Bank posted a 11 per cent rise in net profit to Rs 333 crore for the quarter ended December 31, 2011, against Rs 301 crore in the corresponding year-ago period.

Net interest income, however, dipped by three per cent to Rs 103 crore during the period under review.

Shares of UCO Bank rose by 3.71 per cent to close at Rs 71.30 on the BSE on Wednesday.

Kingfisher exposure

The bank witnessed fresh slippages to the tune of Rs 537 crore, of which, Rs 291 crore is due to its exposure to Kingfisher Airlines.

“We started the cleaning up of our balance-sheet last year. There are legacy issues which we are facing,” said Mr Arun Kaul, Chairman and Managing Director, UCO Bank.

The high cost of deposits has impacted the bank's net interest income and net interest margin, Mr Kaul said. NIM stood at 2.89 per cent (3.11 per cent).

“NIM would otherwise have been much more but for a 10 per cent rise in interest on deposits and large NPA,” he said.

The bank is however hopeful of keeping the NIM around 3 per cent by the end of the fiscal.

The percentage of gross and net non-performing assets to total advances increased to 3.49 (2.57) and 2.04 (1.13) respectively.

shobha@thehindu.co.in

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Postal Department applies to RBI for banking licence

The Postal Department has applied to the Reserve Bank of India for a banking licence, the Communications Minister, Mr Kapil Sibal, said here on Wednesday.

Mr Sibal said he had written to the Finance Minister, Mr Pranab Mukherjee, to expedite the granting of licence.

Speaking on the sidelines of the postal policy round table organised by FICCI, Mr Sibal said, “A national postal policy targeting expansion and modernisation of the postal network would be announced during this year. The Government does not intend to issue licences to courier service companies, but would make it mandatory for them to register.”

Aimed at modernising postal services, the policy is expected to make the department adopt a more financially viable revenue model. It would also provide affordable services at all points in the country as part of its Universal Service Obligation, the Minister said.

The Department is also expecting large-scale private sector participation in providing value added services and extending its product range beyond the current core functions.

“There are tremendous opportunities for the private corporate sector to use its ingenuity to create innovative products and delivery mechanisms through the Indian postal network,” Mr Sibal said.

India currently has 1.55 lakh post offices, 95 per cent of which are located in rural areas.

heena.k@thehindu.co.in

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Golden Peacock Award for Central Bank

Central Bank of India received the Golden Peacock Award for innovative product/service for its retail product Cent Sahayog launched in October 2011.

Designed to strengthen the micro and small manufacturers and service providers (MSE) through a process of fast credit delivery, this product aims to bring this largely un-banked segment into banking fold. Instituted by the Institute of Directors (IOD), the Golden Peacock Awards are declared annually for excellence in the fields of quality, training and innovative product/service among Indian industries.

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SKS Microfinance appoints Ombudsman

SKS Microfinance Ltd today said it has appointed Mr Verghese Jacob as its Ombudsman with immediate effect and also created toll-free helpline in eight Indian languages.

Mr M.R. Rao, Managing Director and Chief Executive Officer, SKS Microfinance, said Mr Verghese will help the company set new benchmarks of excellence in customer protection and grievance redressal.

“The appointment of Mr Verghese Jacob as our Ombudsman showcases SKS Microfinance Ltd’s commitment to continue its pioneering customer protection and grievance redressal initiatives including its constant vigil on process, system and regulatory compliance and customer awareness programmes over the years,” Mr Rao said in a statement.

Mr Verghese said global and Indian development experts know that only microfinance can ensure that the fruits of liberalisation reach the less privileged in rural India and they also feel that microfinance has to reinvent itself to surpass regulatory prescriptions on customer protection and grievance redressal.

“I am confident SKS Microfinance Ltd will live up to such expectations and set new benchmarks in governance and customer protection,” the new ombudsman of SKS said.

Mr Verghese has over 30 years of experience spanning the corporate and social sectors. In the corporate world, he had held senior executive and board level positions with groups such as the Godrej, IBS, ACCEL, KVK etc. He also served as the Chairman of Bombay Round Table, the statement added.

SKS Microfinance shares were trading at Rs 89 apiece on the BSE in the early trade today.

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SBBJ profit up 24% in Q3

State Bank of Bikaner and Jaipur has reported a 24 per cent increase in net profit at Rs 164 crore in the October-December 2011 period, against Rs 132 crore in the corresponding period last year.

A 37 per cent increase in net interest income to Rs 630 crore (Rs 430 crore in the October-December 2010 period) boosted the bank's profitability despite provisions towards bad loans jumping to Rs 142 crore (Rs 76.50 crore).

Mr Shiva Kumar, Managing Director, SBBJ, attributed the profitability to better funds management and acquisition of high-yielding assets.

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IDBI net drops 9.7% amid high fund cost, Kingfisher account

The youngest public sector lender IDBI Bank today reported a 9.7 percent dip in its third quarter earnings to Rs 410 crore on rising bad loans and higher interest expenses.

"We had to take a hit on our post-tax profit due to a one-time provision of Rs 105 crore on account of an aviation account which has become non-performing (the bank has a Rs 700-crore bad loan exposure to Kingfisher Airlines), during the December quarter, which pushed up our gross bad loans to Rs 750 crore," chief financial officer P Sitaram told PTI in a post-result conference call.

Banks have to make 15 percent provisioning for the bad loans in the aviation sector under the RBI norms.

However, he expressed the hope that the bank will be able to maintain its full year earnings at least at the previous fiscal level.

The bank also has nearly 1,000 crore exposure to the troubled national carrier Air India, which is not a substandard asset.

The city-based lender had reported Rs 454 crore profit in the corresponding quarter last year.

A healthy 24 percent growth in interest income to Rs 584.9 crore was offset by higher interest expenses which jumped 37 percent to Rs 479 crore during the quarter, the bank said in a filing to the exchanges this evening, which brought down net profit and earnings per share by 10 and 15 percent, respectively.

Another disappointment came from an 11 percent drop in net interest income during the quarter to Rs 1,059.34 crore from Rs 1,193.27 crore year ago, whereas non-interest income rose to Rs 431.83 crore from Rs 457.96 crore.

The bank's total income rose to Rs 6,281.04 crore, up by 22 percent against Rs 5,159.54 crore in the year-ago quarter.

For the nine months, net profit rose 11 percent to Rs 1,260.83 crore, compared with Rs 1,134.07 crore, helping the bank announce a Rs 2 per share interim dividend for the year.

Net interest income for the nine-months period rose 5 percent to Rs 3,333.93 crore from Rs 3,162.48 crore, while non-interest income declined by 8 percent to Rs 1,341.83 crore from the Rs 1,465.99 crore.

For the first three quarters, its income rose 24 percent to Rs 18,632.29 crore from Rs 14,983.82 crore year ago.

Deposits rose 18 percent to Rs 1,77,123 crore during the period from Rs 1,50,239 crore, while advances jumped 16 percent to Rs 1,56,217 crore up from Rs 1,34,491 crore, the bank said.

Total business grew 17 percent to Rs 3,33,340 crore up from Rs 2,84,729 crore, while total assets grew by 16 percent to Rs 2,55,888 crore rising from Rs 2,21,099 crore as at the end of December 2010.

Aggregate assets as of December end stood at Rs 2,55,888 crore as against Rs 2,21,099 crore, registering a growth of 16 percent.

Fee income stood almost flat during the quarter at Rs 361 crore as against Rs 358 crore.

The higher provisioning has impacted the capital adequacy ratio which declined to 13.53 percent (tier I being at 7.54 percent) from 14.10 percent (tier I at 8.84 percent) in the year ago period.

Sitaram, who ruled out any immediate cut in lending rates, expressed the hope that cost of funds will not rise from now on and that he expects interest rate to come down from the first quarter of the next fiscal.

IDBI Bank shares went up 4.06 percent to Rs 101.30 on the BSE whose main gauge sensex jumped nearly 2 percent or 330.30 points.

Source: EconomicTimes

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Govt stake in SBI to go up by 2.5% post Rs 7900 cr capital infusion

The country's largest lender State Bank of India (SBI) today said the government's stake in the company is likely to increase by up to 2.5 per cent following the capital infusion of Rs 7,900 crore.

"If you go by the past share price of SBI, it (the price of preferential allotment) is likely to be somewhere about Rs 1,800 to 2,000. If that is the range that is going to happen, then government equity shares will go up by 2-2.5 per cent," SBI Managing Director Diwakar Gupta told reporters here.

At present, the government of India holds a 59.4 per cent stake in SBI.

Gupta said the preferential allotment would be governed by the guidelines of market regulator Sebi, which is the higher of the six-month average or 15-day average share price of the company.

The capital infusion by the government will raise the Tier-I capital of the bank to about 8 per cent.

He said SBI would need about Rs 15,000 crore of additional capital and the infusion could happen by way of qualified institutional placement ( QIP), a follow-on public offer (FPO) or a rights issue.

"We would be needing about Rs 15,000 crore of additional capital. For the current year, the calculation is closer to Rs 8,000 crore for Tier-I," Gupta added.

He said SBI has submitted a rough plan of its capital requirement for the next five years to the government. "The total capital required over three years is Rs 28,000 crore. The 15,000 crore is part of that," Gupta added.

SBI had raised over Rs 16,000 crore through a rights issue in 2008. In the last SBI rights issue, the government contribution to the bank was in the form of bonds, rather than cash.

As of September, 2011, the capital adequacy ratio (CAR) of SBI stood at 11.4 per cent. Of this, Tier-I capital stood at 7.47 per cent at the end of second quarter against the minimum 8 per cent level desired by the government.

Source: EconomicTimes

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Higher interest income lifts ICICI Bank Q3 net 20%

ICICI Bank reported a 20 per cent increase in its net profit at Rs 1,728 crore in the quarter ended December 31, 2011, on the back of an increase in interest income and lower provisions on account of a decrease in non-performing assets. In the corresponding year-ago period, it had recorded a net profit of Rs 1,437 crore.

The bank's profitability in the reporting quarter was also boosted by dividend income of Rs 150 crore from its subsidiary, ICICI Prudential Life Insurance Company, which posted a net profit for the first time since inception.

Provisions decreased 27 per cent to Rs 341 crore (Rs 465 crore in the October-December 2010 period). Gross NPAs decreased to Rs 9,723 crore (Rs 10,187 crore).

The fall in NPAs was on account of decline in unsecured retail loans, which was down 35 per cent from last year, said Ms Chanda Kochhar, Managing Director and CEO, ICICI Bank.

“Our secured assets continue to grow and the credit quality in this segment is strong. The bank is back on growth path,” she said.

Despite lower provisions, the provision-coverage ratio was 78.9 per cent as on December 31, 2011, compared to 71.8 per cent as on December 31, 2010. Net restructured assets at December 31, 2011, were Rs 3,070 crore.

There could be some additions to restructured assets in the current quarter as well, Ms Kochhar added.

The bank has an exposure of 7 per cent to the power sector and so far, there have been no shocks in the asset quality of the segment, she added.

Growth segments

The segments that saw growth were secured retail (mortgages and auto loans), domestic corporate (working capital and disbursal of earlier loans) and international corporate (foreign currency loans given to Indian corporates).

“Credit growth is slower. Growth momentum was first seen in corporate loans and now it is being seen on the retail side,” Ms Kochhar said.

This financial year the bank is targeting a credit growth of 18 per cent.

Due to the rundown of the unsecured portfolio, the share of retail loans decreased to 33.5 per cent of total assets, from 38 per cent.

“We are offering unsecured loans (credit cards and personal loans) only to our existing customers,” Ms Kochhar said.

Non-interest income growth was subdued due to a loss of Rs 65 crore in treasury income, against a profit of Rs 21 core in the year ago quarter. For the nine-month period ended December, net profit was Rs 4,653 crore (Rs 3,699 crore).

Nine-month profit up

On a consolidated basis, net profit for the nine months was Rs 5833 crore, up 29 per cent, from Rs 4,545 crore in the year-ago period.

Shares of ICICI Bank closed 5.87 per cent higher, at Rs 902, on the BSE, on Tuesday.

priyan@thehindu.co.in

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Nabard sanctions Rs 20 lakh to Ahmedabad bank to finance JLGs

The National Bank for Agriculture and Rural Development (NABARD) has sanctioned a grant assistance of Rs 20 lakh to the Ahmedabad District Cooperative Bank for a project involving formation and finance of 1,000 Joint Liability Groups (JLGs).

The Bank will be financing these groups in Ahmedabad and Gandhinagar districts in two years. The assistance from NABARD is partly given at the time of sanction of loan by the bank to JLG and partly after prompt repayment by JLG, Mr H R Dave, Chief General Manager, said here on Tuesday.

With land-holdings becoming smaller, making it difficult for the banks to reach out to such increasing number of marginal farmers, NABARD has been focusing on financing through JLGs to facilitate easy availability of loans to clients such as tenant farmers, oral lessees, farmers without proper land records, groups starting micro enterprises and individuals who find it difficult to access formal credit.

NABARD had launched a new banking innovation of JLGs to reach out to such farmers. The JLG is an informal group comprising 4 to 10 members pursuing any individual or joint activity. The main purpose for formation of such groups is to avail loan from formal banking institutions.

In order to encourage the banks to adopt the JLG model, NABARD had earlier provided assistance of Rs 34 lakh to three regional rural banks in Gujarat for financing 1,700 JLGs.

The Ahmedabad District Cooperative Bank is the second cooperative bank after the Rajkot District Cooperative Bank to receive the grant.

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United Bank of India net spurts 38.5% in Q3

United Bank of India on Tuesday posted an increase of 38.5 per cent in net profit to Rs 226 crore for the third quarter ended December, 2011, compared with Rs163 crore recorded in the same period of last fiscal.

During the quarter, business of the bank stood at Rs 1,41,915 crore, with advances touching Rs 59,100 crore and deposits Rs 82,815 crore.

Net interest margin (NIM) during the quarter stood at 3.38 per cent as compared to 3.21 per cent in the corresponding period of last fiscal, said Mr Bhaskar Sen, Chairman and Managing Director, UBI.

Operating profits of the bank during the quarter under review stood at Rs 483.27 crore registering a rise of 25 per cent as compared to Rs 386.71 crore in the same period of last year.

Capital adequacy of the bank at the end of December 31, 2011 stood at 12.63 per cent, Mr Sen said.

Gross NPA of the bank as on December 2011 stood 3.28 per cent, while net NPA stood at 2.01 per cent.

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Andhra Bank launches loan for professionals

Andhra Bank has launched a new loan for practising professionals, called AB Professional Loan.

“The service sector is growing and many professionals are in need of capital. The idea is to promote self-employed professionals,” Mr B.A. Prabhakar, Chairman and Managing Director of Andhra Bank, said after formally launching the product here on Monday.

Professionals including chartered accountants, engineers, advocates and management consultants can apply for collateral-free loans.

The maximum amount of loan will be Rs 10 lakh with 14 per cent interest per annum. It can be availed for establishing offices, buying furniture, purchase of tools, equipment and books, among others.

“We have a target of Rs 150 crore business before end of March 2012 under this product,” the Chairman and Managing Director said.

This product was an improvement on existing product for medical professionals, he said.

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Life insurance sale must be need based, says IRDA

The sale of life insurance policies are set to become more scientific soon.

The life insurers should ensure a need-based sale of life insurance products by their direct sales personnel, the Insurance Regulatory and Development Authority said in the draft guidelines on product matrix released on Tuesday.

“It is important and necessary for insurers to have in place a suitability index (or a prospect product matrix) that can serve as a self governing tool to assess the quality of sale,” Mr J. Hari Narayan, Chairman, IRDA said.

As per the draft guidelines, an insurer or a distributor must make reasonable efforts to obtain a consumer's suitability information prior to making a recommendation to the consumer on a product.

Suitability information means information should include factors such as age, annual income and financial resources used for funding the purchase of the life insurance product besides risk tolerance.

The regulator is planning to bring the product matrix (or need-based sale) from April 1, 2012.

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Muthoot Finance Q3 profit jumps 61%

The Kerala-based gold financing company, Muthoot Finance Ltd has registered a 61 per cent growth in its net profit to touch Rs 251crore for the quarter ended December 31, 2011, against Rs 155 crore in the corresponding period of the previous fiscal. The figures for nine months ended December 31 stood at Rs 657crore (Rs 355 crore).

The total income for Q3 stood at Rs 1,231crore (Rs 645crore), a growth of 91 per cent.

The retail loan assets under management increased by Rs 1,944 crore to Rs 22,885crore. The company has got a branch network of 3,480 spread across 21 States and four Union Territories.

Employee stock option

Announcing the results, Mr M. G. George Muthoot, Chairman, Muthoot Finance Ltd, said that the board of directors has also constituted a committee of directors to approve and finalise terms for instituting an employee stock option plan to the employees.

He said that the quarter gone by witnessed significant changes in the operating environment of the company. Significant gyrations in gold price and increase in cost of borrowing being the most significant ones.

Thanks to the robust risk management practices and efficient management of funding and operating costs, he said the company has been able to achieve 61 per cent increase in profit against a 2.58 per cent rise in borrowing cost and the Net Interest Margin reducing by 0.43 per cent.

Concurrent with the steep rise and fall in gold prices, the risk management practices were streamlined, enabling the company to exercise strict control over the loan to asset value.

The robust product demand enabled 91 per cent growth in top-line and this coupled with geographic expansion continue to be the drivers of loan growth, he added.

sajeevkumar@thehindu.co.in

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Bank of America gets top fees in $10 billion M&A double

LONDON: Bank of America Merrill Lynch stands to earn the lion's share of a fee pot worth around $100 million as the only bank to win a role related to both multi-billion dollar bids for Swiss companies Roche and ABB.

The firm would collect $25-$33 million for advising engineering group ABB if a $3.9 billion friendly deal with US electrical components maker Thomas & Betts goes ahead, according to estimates from Thomsonreuters / Freeman Consulting.

Bett's adviser Deutsche Bank would earn $30-$35 million in the event of a deal.

Bank of America would also share between $37 million and $42 million with Goldman Sachs if it successfully defends its client Illumina against a $5.7 billion hostile bid from Swiss drug maker Roche.

Citigroup and Greenhill would share $30 to $35 million as advisers to Roche if the bid succeeded.

Bankers said both deals represented positive momentum after a dismal year for dealmaking.

"Companies know what they want to do. Now things are settling, more of them will react while valuations are attractive," said one senior European banker.

"This could lead to an improvement over the fourth quarter." Global mergers and acquisitions declined dramatically in the second half, with dealmaking in the fourth quarter falling 31 percent from the previous three months to $398 billion.

It was the third consecutive quarterly decline and the lowest quarter overall since the third quarter of 2004.

Source: EconomicTimes

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SBI Life launches multi-lingual website

Private insurer SBI Life Insurance today launched multi-lingual website in nine Indian languages to facilitate communication with customers in the language they are comfortable with.

The website will provide information in Hindi, Marathi, Gujarati, Tamil, Telugu, Malayalam, Bengali, Kannada and Punjabi.

“In line with our customer centric business philosophy, the multi-lingual website has been created to facilitate communication with customers in the language they are most comfortable with. The initiative is aimed at further simplifying customers’ understanding about our products and services so as to enable them to make well-informed decisions before investing their hard earned money,” SBI Life Managing Director and CEO Mr M N Rao said in a release issued here.

To reach out to rapidly increasing online audience, the company recently strengthened its presence on the online medium.

With India crossing the crucial 100 million internet users’ mark in December 2011, SBI Life’s initiative assumes significance given the fact that a large section of internet usage would emanate from tier-2 and tier-3 towns where web users prefer to browse content in their native language.

The company, which is joint venture between the State Bank of India and BNP Paribas Cardif, has a market share of 18.9 per cent among private life insurers and a total market share of 5.2 per cent.

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Provision reversal helps LIC Housing Fin net grow 43%

Helped in good measure by reversal in provisions, LIC Housing Finance Ltd has reported a 43 per cent increase in net profit at Rs 306 crore in October-December 2011, against Rs 213 crore in the corresponding year-ago period.

With the housing finance company aligning its provisioning policy on standard assets/ bad loans, to match with the revised norms prescribed by National Housing Bank (the housing finance regulator), LICHF has reversed the excess provision of Rs 79 crore in the reporting period.

While income from operations increased 32 per cent to Rs 1,539 crore (Rs 1,161 crore), ‘other income' dipped sharply by 97 per cent to Rs 4 crore (Rs 141 crore).

Explaining the reason for the drop in other income, Mr V. K. Sharma, Director and Chief Executive, LIC HF, said in the October-December 2010 period his company had recorded a one-time gain due to sale of a portion of its stake in LIC Mutual Fund to Nomura. During this period, LIC HF also received the proceeds from the sale of its stake in a Kotak Group promoted venture capital fund.

“This year, we don't have one-time gains,” said Mr Sharma.

Loan disbursals

In the third quarter, the company sanctioned and disbursed loans worth Rs 6,009 crore (Rs 5,302 crore) and Rs 4,568 crore (Rs 4,215 crore) respectively Disbursements in the developer loan segment were lower at Rs 154 crore against Rs 411 crore for the corresponding period in the previous year.

Net interest margin (interest income less interest expense divided by average earning assets) declined to 2.27 per cent in the quarter ended December 31, 2011, against 3.14 per cent in the corresponding year-ago period.

Mr Sharma attributed the fall in NIM to his company going slow on high yielding developer loans and rising cost of liabilities.

Interest rates, housing scenario

Despite rising property prices, there was good demand from home loans in Tier-II cities such as Patna, Bhubaneshwar, Vishakhapatnam, Vijayawada, and Coimbatore, said the LIC HF chief.

However, the Mumbai property market continues to remain static with developers not coming up with worthwhile projects. The Delhi and Bangalore markets are beginning to look up.

LIC HF expects its outstanding loan portfolio to grow to Rs 63,000 crore by March-end 2012.

Preference Issue

The housing finance company has not yet firmed up a decision on further issue of equity shares through preferential allotment and/or qualified institutional placement, said Mr Sharma.

Shares of LIC HF closed 2.23 per cent lower at Rs 246.05 on the BSE, against the previous close of Rs 251.65.

kram@thehindu.co.in

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