Central Bank of India may meet RBI’s 16% credit growth target

Central Bank of India may just about meet RBI’s credit growth target of 16 per cent for the fiscal, even as other banks are smarting under tardy credit offtake.

Thrust on home and SME loans has come to the aid of the bank on this score.

The sluggish credit growth of banks due to high interest rates and slowdown in the economy has prompted RBI to mull revision of its target of 16 per cent. In the first nine months of the year, banks credit growth was about seven per cent.

Initially, RBI had projected a 17 per cent credit growth for the year, but had to trim it by one per cent mid-way, as corporate houses turned to non-bank avenues for working capital. Lenders expect the growth to pick-up in the current quarter.

“We have achieved 12 per cent in the first nine months. We expect credit offtake, especially in the home segment, to pick-up this quarter. We may end the year at close to 16 per cent,’’ Malay Mukherjee, Central Bank of India Executive Director, told Business Line on the sidelines of a function here today.

The bank had dished out home loans worth Rs 6,000 crore in the first nine months. “We want to increase it by Rs 4,000 crore this quarter,’’ he said.

amitmitra@thehindu.co.in

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Vijaya Bank Q3 net up at Rs 127 cr

State-owned Vijaya Bank has reported a 1.9 per cent increase in net profit at Rs 126.74 crore for the third quarter ended December 31, 2012.

The bank had posted a net profit of Rs 124.27 crore in the corresponding quarter last fiscal, Vijaya Bank said in a filing to the BSE.

Total income increased to Rs 2,357.02 crore during October-December quarter from Rs 2,173.92 crore in the same period last year.

During the first nine months of 2012-13, the profit declined 9.6 per cent to Rs 361.46 crore from Rs 400.02 crore in the same period a year ago.

Total income rose to Rs 6,978.68 crore in the first three quarters compared with Rs 6,225.88 crore in the same period last financial year.

The bank shares were trading at Rs 59.95, down 0.5 per cent in the afternoon session on the BSE today.

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Deutsche Bank, Morgan Stanley offering 1-crore-plus salary at IIMs, e-comm firms stay lukewarm

Banks are stepping up hiring at IIMs this placement season and have rolled out at least three 1-crore salary offers so far. Deutsche Bank has given two such offers at IIM-Ahmedabad for its London office and Morgan Stanley has offered a 1-crore package to a student at IIM-Calcutta, sources involved closely in the placement process say.

Most global and Indian banks are hiring more than last year and many are offering pay packets that are 10-15% higher.

The top five consulting firms are again making their presence felt at the IIMs and will together hire over 200 people this year, according to ET estimates put together from conversations with sources from these firms. BCG will end up recruiting 60-70 consultants and McKinsey will hire a slightly higher number. The salary offered ranges from 18-20 lakh with an assured bonus of 1-2 lakh. Interestingly, this hasn't changed much over the past few years.

But e-commerce firms, which had hired big at the IIMs last placement season, are going slow this year, according to sources from companies and the institutes. These are still early days with the placement frenzy likely to peak sometime next month. Around 2,800 students from 13 IIMs will enter the job market this year.

Banks rule the roost

HSBC, which recruited 17 students from top IIMs last year, is now hiring 30-40% more. It is increasing pay packets from around 15.5 lakh last year to about 16.5 lakh in its resident management trainee programme and 18 lakh for students with work experience. "We are looking at IIM A, B, C and L to source talent for our treasury business,'' said a senior HSBC banker.

Standard Chartered Bank, which hired 15 IIM grads in 2012, plans to recruit more this year. The bank recruits from five IIMs, with Ahmedabad as the preferred campus for both wholesale and investment banking. Bank of America Merrill Lynch, which prefers to hire from IIM Ahmedabad, Bangalore and Calcutta, is also likely to hire more this year, sources say. The bank had laid off staff in 2012.

Among Indian banks, Axis Bank, according to sources, is offering 15-30 lakh, depending on the job profile. "The bank will hire for profiles in corporate and investment banking, retail banking and other corporate functions," said Rajesh Dahiya, president, HR, Axis Bank.

HDFC to Offer 15-18 Lakh

HDFC Bank hires about 5-6 candidates from IIMs. Most of these are for trading in bonds and currencies. For commercial banking such as corporate and retail, they pick graduates from other schools. The bank is expected to offer a 15-18 lakh package.

"Banks and consultants have made a strong impact during the placement season," an IIM Kozhikode spokesperson said. "Banks offered summer interns 10-12% more than last year, with 30% rise in new recruiters. Laterals were offered 32 lakh a year," sources say. IIM Kozhikode also received 7 offers for $60,000 from overseas companies compared to one offer for $70,000 last year.

Brakes on E-comm

E-commerce companies, a big hit at campuses last year, are pulling back; some are not hiring from campuses at all. redBus, which hired from IIM Indore, IIM Ahmedabad and XLRI last year, is not participating in campus placements this year. "We are well-staffed at the entry level and are not going for placements," says Phanindra Sama, CEO of redBus.

Myntra and Flipkart will also hire less from the IIMs this year. Other internet ventures too are iffy. "We don't have a target, we will only hire if there are exceptional candidates," says Manmohan Agarwal, CEO of Bigshoebazaar India, which owns fashion and lifestyle etailer Yebhi. The company had hired 10 candidates from IIM Ahmedabad and IIM Kozhikode last year. It will offer Rs 10-12 lakh.

Similarly, Valyoo Technologies, which runs portals like Lenskart, Jewelskart and Bagskart, is hiring only 4-5 candidates this year. It had picked up 12 from IIM Indore and Lucknow last year.

"We are only looking to hire laterals with around two-year work experience in business analytics and business development roles," says Peyush Bansal, co-founder and CEO of three-year-old Valyoo. It will offer 12 lakh, similar to last year.

But Google is a big exception in the online space. The global search giant has stepped up hiring by nearly 40% this year. "The increased hiring numbers are a reflection of Google India's growth curve, business momentum and the overall organisational focus on India," Rajan Anandan, vice-president & managing director, sales & operations, Google India.

Consulting Gains

Consulting firms dominated PPO season at IIM-A and IIMB this year too. BCG was the largest recruiter (45 candidates) of the summer interns at IIMs.

Source: Economic Times

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Sidbi slaps winding-up petition on Catmoss, alleges mismanagement

Kidswear maker Catmoss Retail, which is already facing audit investigations at the behest of its private equity investor SAIF Partners, has now been slapped with a winding up petition by one of its lenders.

Small Industries Development Bank of India (Sidbi) earlier this month filed a winding up petition in the Delhi High Court against Catmoss and accused the retailer of "financial mismanagement" and "mismanagement of the company".

Sanjeev Sagar, the lawyer representing Sidbi, said his client had loaned 7.5 crore as working capital to Catmoss in July 2010 and the retailer was supposed to repay by October last. "So far not a single penny has come," he said, adding that the cheques issued by Catmoss were dishonoured.

The court issued notice to Catmoss in its first hearing of the case on Wednesday. The next date of hearing is February 28, Sagar said.

Catmoss promoter Ashwini Chawla did not respond to an e-mail questionnaire from ET till late on Wednesday.

A person with direct knowledge of Catmoss' operations said that the retailer has also defaulted on payments for the last quarter to other lenders including State Bank of India, Union Bank of India, Syndicate Bank, Punjab National Bank and Oriental Bank of Commerce, which have collectively loaned about 90 crore to the company.

SAIF Partners, which invested about 115 crore in the kidswear retailer to pick up about 34% stake, has meanwhile mandated auditing firm KPMG to study the books of Catmoss after anonymous letters accused Chawla and a SAIF Partner executive of wrongdoings, the person quoted above said. The executive left SAIF Partners since the anonymous letters surfaced in September 2011.

SAIF had made the investments in Catmoss in three trenches between July 2010 and September 2011. The last trench of 45 crore was to foray into a premium kidswear brand called Munich Polo.

While Catmoss products range starts at around 500, entry-level price for Munich Polo is 2,000. The Munich Polo website flaunts German culture and uses Western kids as models and the company has completely desisted from showing any association with Catmoss.

According to the latest financial documents with the Registrar of Companies, Catmoss made a profit of 16 crore for the fiscal year ended March 2011 compared to loss of 8 crore in the previous year.

Catmoss is the latest in a string of Indian retailers that have been charged with various wrongdoings by PE investors. In 2011, US-based PE firms Bain Capital and TPG Capital dragged Lilliput Kidswear to court, accusing the kidswear retailer of accounting fraud. Prior to that, ICICI Venture charged the promoter of now-defunct Subhiksha Trading Services of widespread financial irregularities in the discount retailer where the PE firm held 23%.

Source: Economic Times

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Bank officers union opposes move to merge nationalised banks

The All-India Bank Officers Association (AIBOA) has opposed the move to merge the nationalised banks.

S. Nagarajan, General Secretary of the association, addressing a press meet at Tiruchi recently, said the move would widen the gap between the banking industry and the customers, and it would pave the way for privatisation of banks.

He said the future course of action against the move would be taken at the end of the national conference of the All-India Bank Employees Association (AIBEA) to be held in Kochi next month. Further, the AIBOA would await the budget proposals for the next financial year.

The financial inclusion programme would be defeated if the banks were merged and. the number of branches would be reduced and the customers would be deprived of their right to select a bank of their choice.

He announced that the AIBOA has been preparing a list of non-performing assets and would make it public in course of time.

M.A. Srinivasan, General Secretary of Canara Bank Officers’ Union, underlined the need for filling up the vacant posts in public sector banks. About two lakh posts were lying vacant in various cadres.

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UCO Bank to get Rs 681 cr from govt by March

UCO Bank today announced that it will get Rs 681 crore as part of the government’s capital infusion plan for the current fiscal.

The board approved the proposal for issue of equity shares on preferential basis in favour of Government of India for an amount aggregating to the tune of Rs 681 crore, UCO Bank said in a filing on the BSE.

The issue price may be determined in accordance with SEBI (ICDR) Regulations 2009. The proposal is subject to necessary regulatory approvals, it said.

The government has approved infusion of Rs 12,517 crore in around 10 state-owned banks by March.

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SBI to hire 1,500 probationary officers

In what can be good news to millions of graduates, banking behemoth State Bank of India has lowered the minimum qualification required to apply for the post of probationary officers.

In a notification for recruiting 1,500 probationary officers issued on Wednesday, SBI prescribed graduation in any discipline as the minimum qualification without mentioning any percentage of marks.

“Till last year, candidates were required to have a minimum of 55 per cent to be eligible to apply for probationary officers. This notification does not mention this,” C. S. Vepa, Director, National School of Banking, a training institute for bank exams, said.

The candidates were happy. “Actually, many of us who do not have 55 per cent can also do well in the written exam because the skill sets required are different in academic and bank exams,” Subba Reddy, a commence graduate said.

Interested candidates can apply online between January 30 and February 23. A written examination would be conducted on April 28 this year.

Graduates in the age group 21-30 years are eligible to apply. The remuneration for a probationary officer goes up to a maximum of Rs 69,000 a month depending on the place of posting.

naga.gunturi@thehindu.co.in

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Karnataka Bank Q3 net up 11% despite higher tax outgo, provisioning

Karnataka Bank Ltd recorded a 11.13 per cent growth in net profit at Rs 80 crore during the third quarter of 2012-13 against Rs 72 crore in the corresponding period of the previous fiscal.

P. Jayarama Bhat, Managing Director and Chief Executive Officer of the bank, told Business Line that this is in spite of an increase in the tax expense and additional provisioning for restructured standard accounts as per the RBI’s directive.

(In the second quarter review of monetary policy on October 30, the RBI had increased provisioning for restructured standard accounts to 2.75 per cent from 2 per cent.)

“We have increased the provisioning by 0.75 per cent for the entire portfolio as per the RBI guidelines. That came up to about Rs 9 crore,” he said.

Stating that wage revision negotiations have started, he said the bank has provided for that also.

The tax expenses of the bank, he said, stood at Rs 36.92 crore during the third quarter of 2012-13. The bank had got a tax rebate of Rs 6.37 crore in the third quarter of 2011-12.

The net profit for first nine months of the fiscal stood at Rs 280.69 crore against Rs 162.91crore in the corresponding period of the previous year.

On the outlook for the fourth quarter, Bhat said: “We will be on target. We have already taken a one-time hit for all provisioning. We hope to do better in the last quarter. We are aiming to bring the gross NPA to 2.5-2.75 per cent from 3.3 per cent.”

During the quarter, the net interest income of the bank stood at Rs 227.8 crore (Rs 184.67 crore), and ‘other income’ at Rs 86.24 crore (Rs 87.34 crore).

On Wednesday, the Karnataka Bank scrip closed at Rs 164.95 on the BSE, down 5.55 per cent against the previous closing of Rs 174.65.

vinayak.aj@thehindu.co.in

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Syndicate Bank profit jumps 50% on better yields, recoveries

Syndicate Bank’s net profit increased 50 per cent at Rs 508 crore in the third quarter ended December 31, 2012, against Rs 338 crore in the year-ago period.

The increase in profit was driven by reduction in cost of deposits, improvement in yields and good recoveries, M. G. Sanghvi, Chairman and Managing Director, Syndicate Bank, told newspersons here on Wednesday.

The net interest income rose 9.6 per cent to Rs 4,109 crore, while advances and deposits grew by 17.3 and 14.6 per cent respectively.

The net interest margin, however, declined marginally to 3.28 per cent (3.33 per cent).

The total business of the Bengaluru-based bank has crossed the Rs 3-lakh crore mark.

The net non-performing assets declined marginally to 0.85 per cent (0.86 per cent).

“Our board has approved raising Rs 1,500 crore equity via Qualified Institutional Placement or a rights issue,” Sanghvi said.

The process, subject to regulatory approvals, is likely to be completed by March.

In addition, the board’s nod was also obtained for mobilising tier–II capital of up to Rs 2,000 crore, he added.

OUTLOOK

Syndicate Bank will focus on pushing up credit to the retail and mid-corporate segments, Sanghvi said.

Advances and deposits, he said, could grow at 17 per cent and 15 per cent respectively. “We are hopeful of maintaining the NIM at the current level for the full year,” he added.

M. Anjaneya Prasad, Executive Director, said the number of branches would be increased to 3,000 by end-March this year from the current 2,761.

Recruitment of 1,400 clerks and 1,500 officers was on the cards through the Institute of Banking Personal Selection, he added.

Syndicate Bank’s scrip lost 5.27 per cent to end at Rs 132.25 on the Bombay Stock Exchange on Wednesday.

naga.gunturi@thehindu.co.in

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SBI expects profit of Rs 14,000-15,000 cr in FY13

State Bank of India expects a net profit of up to Rs 15,000 crore in this fiscal, against Rs 11,700 crore in the last financial year.

“The net profit of the bank during the current financial year is expected to be between Rs 14,000 crore and Rs 15,000 crore,” SBI Chairman Pratip Chaudhuri told reporters here.

The profit this year would be considerably higher than Rs 11,700 crore registered last financial year, the SBI chief said, adding that the bank expected to retain Rs 7,400 crore profit during the last quarter as recorded in the previous quarter.

On SBI’s performance in Odisha, Chaudhuri said the bank’s advances were Rs 30,375 crore and priority sector advances 54 per cent, well beyond the benchmark of 40 per cent.

The cash-deposit ratio of SBI, which had 695 branches in Odisha, was at a healthy 70 per cent with deposit at Rs 42,989 crore, he said, adding SBI was the leader in self help group linkage.

The bank had so far achieved credit linkages of 2.66 lakh SHGs aggregating Rs 1750 crore, more than 80 per cent of the linkages of other banks in the state, he said.

Stating that the number of SBI branches would soon be increased to 700, Chaudhuri said of the existing branches, 403 were in rural centres, 158 in semi-urban areas and 134 in urban centres.

“In other words, 81 per cent of our branches are in rural and semi-urban centres,” he said, adding SBI had lead bank responsibilities in 19 of the 30 districts in Odisha.

Out of these, 14 were affected by left wing extremism (LWE), he added.

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Andhra Bank gets Rs 40-cr biz in home loan mela

Andhra Bank has generated a business to the tune of Rs 40 crore in a two-day housing loan mela and property show held here on Jan 19-20.

According to a release, housing loans were offered at 10.50 per cent interest rate on loans for Rs 10 lakh to Rs 30 lakh while 10.75 per cent was the rate of interest for loan above Rs 30 lakh.

On-the-spot approvals were accorded for loan applications covering 169 branches of banks located in the two zones of the State capital during the event, Venkata Ramana Reddy, Director, Andhra Bank said.

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Allahabad Bank to offload NPAs worth Rs 540 cr

Allahabad Bank will be offloading non-performing assets worth Rs 540 crore to an asset reconstruction company.

“The deal is on the table and the process will be completed by next month,’’ Shubhalakshmi Panse, Chairman and Managing Director, Allahabad Bank, told newspersons here on Tuesday.

Allahabad Bank, which had witnessed rise in NPAs in the quarter ended September 30, 2012, has also drawn up a strategy for better NPA management.

“We have put in place a three-pronged strategy by creating a separate vertical, doubling the recovery targets for the staff and off-loading some portion of NPAs to ARC,’’ Panse said.

She said that the net interest margin for the current financial year could be around 2.85-2.9 per cent.


naga.gunturi@thehindu.co.in

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CorpBank fetes branch heads

To recognise the performance of employees, Corporation Bank awarded Chairman and Managing Director Club and Executive Director Club memberships to 37 branch heads of the bank who excelled in various areas of operation during the last fiscal.

Out of 37 branch heads, 23 were selected to Chairman’s Club and 14 to Executive Directors’ Club.

The membership offers attractive incentive packages to the awardees. The induction of the club members was done at the corporate award ceremony organised by the bank here.

Ajai Kumar, Chairman and Managing Director of the bank inducted the performing branch heads at the award ceremony in the presence of the General Manager (Personnel), H.S. Saini, and General Manager (Finance), C.G. Pinto.

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SBI pitches for cut in repo rate, CRR

Pitching for a cut in interest rates and cash reserve ratio by the Reserve Bank of India, State Bank of India Chairman Pratip Chaudhuri today said the move will boost investment and growth.

“As RBI’s monetary policy review is slated on January 29, we have already requested for a cut in cash reserve ratio by up to 100 basis points (1 per cent) and repo rate by 50 basis points (0.5 per cent),” Chaudhuri told reporters here at an event.

Stating that he was thankful to RBI for reducing CRR, the amount banks have to keep as deposits with the central bank, from six per cent to 4.25 per cent, he said in view of high inflation prevailing in the country the interest rate needs to be lowered to avoid stagnation.

“Inflation can be contained by boosting the manufacturing sector and raising supply for which high investment is required,” he said, adding that interest rates should be cut to increase investment.

“If inflation and stagnation are allowed to persist, it will create a grim situation of stagflation,” he said.

Lowering of interest rates, he said would considerably improve the investment climate which remained sluggish.

Higher investments

Rise in investment would also brighten the employment scenario by giving a boost to economic activities, the SBI chief said, warning that India might face a Europe-like situation if the prevailing scenario continues.

Non-performing assets

Admitting the growing non-performing assets of SBI, Chaudhuri said it was primarily due to economic slowdown and the bank has decided to be patient as “this is a cyclic process and well under control”.

Voicing concern over situation in states like Odisha, particularly in the steel sector, Chaudhuri said restrictions clamped recently due to environmental reasons and excess mining had caused a setback and NPAs in Odisha stood at about Rs 2,500 crore.

“But in these cases if we don’t remain patient, the situation will worsen,” he said, adding that “we need to differentiate between wilful defaulters and others’’.

Stating that investments in steel, power, aluminium and fertiliser sectors had slowed down, Chaudhuri said whatever fund was sanctioned earlier is now being utilised for operations.

The total exposure of SBI in the steel sector is around Rs 18,000 crore and in Odisha it is Rs 4,000 crore, he said, adding that the main challenge at present is in the field of lending.

Capital infusion

Referring to capital infusion, the SBI chief said the Central Government is extending about Rs 3,000 crore by the end of the current fiscal.

This was part of Rs 12,000-crore infusion plan approved by the Finance Ministry recently.

Last fiscal, the Government had infused Rs 7,900 crore in SBI to increase the Tier-I capital. Following the capital infusion in March last year, the Government holding in SBI rose to 61.58 per cent from 59.4 per cent.

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Bank of Maharashtra net jumps 43% in Q3 to Rs 194 cr

Bank of Maharashtra today reported 43 per cent jump in net profit at Rs 194.06 crore for the third quarter ended December 31.

Net profit of the public sector lender in the same quarter of the previous fiscal, 2011-12, was Rs 135.54 crore.

Total income of the bank during the October-December quarter of 2012-13 increased to Rs 2,710.16 crore from Rs 2,020.78 crore, it said in a filing to the BSE.

The non-performing assets of the bank increased to 0.66 per cent during the quarter, from 0.54 per cent over the same quarter a year earlier.

Income from wholesale banking increased to Rs 1,846.96 crore from Rs 941.92 crore, however, while income from retail banking fell to Rs 196.75 crore from Rs 605.79 crore.

The bank had reserves and surplus of Rs 4,030.75 crore as on December 31, 2012 as against Rs 3,249.90 crore as on December 31, 2011.

Its deposits as of December 31, 2012 stood at Rs 99,276.49 crore, from Rs 69,925.68 crore over the same period of the previous fiscal.

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Kotak Mahindra Bank standalone net jumps 31% in Q3

Kotak Mahindra Bank has reported a 31 per cent increase in its standalone net profit at Rs 362 crore in the October-December quarter of 2012-13 fiscal.

The private sector lender had posted a net profit of Rs 276 crore in the year-ago period.

Net interest income (difference between interest earned and expended) rose 26 per cent to Rs 822.85 crore (651 crore in Q3FY’12). Other income was up 8 per cent at Rs 305 crore compared with Rs 282 crore in the corresponding quarter.

Percentage of net non-performing assets (NPAs) increased to 0.64 per cent from 0.56 per cent. Total provisions increased to Rs 42 crore (Rs 31 crore).

Consolidated results

Consolidated net profit jumped 25 per cent to Rs 577 crore in the third quarter under review compared with Rs 463 crore in the same quarter last fiscal.

NII was up 23 per cent to Rs 1,232 crore (Rs 1,000 crore).


beena.parmar@thehindu.co.in

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IDBI Bank plans to raise Rs 555 cr via preferential issue to Govt

IDBI Bank Ltd is planning to raise Rs 555 crore through preferential issue of equity capital to the Government, the bank said in a notice to the BSE. The public sector bank is also planning to raise up to Rs 2,500 crore via the qualified institutional placement route. Both the capital raising programmes, which will shore up its core capital, are subject to approval from shareholders and other statutory/regulatory approvals, if any, the bank said.

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Growing demand for home loans lifts HDFC net 16% in Q3

India’s largest housing finance company, Housing Development Finance Corporation’s third quarter net profit grew 16 per cent on a standalone basis boosted by strong demand for home loans from individual customers.

In the October-December quarter, HDFC’s net profit grew to Rs 1,140 crore from Rs 981 crore, a year ago.

“The growth in profit was because of strong loan book growth in the individual category of buyers across the country,” Keki Mistry, Vice-Chairman and CEO, said.

The higher profit during the quarter indicates a growing demand for home loans in India’s tier-II and tier-III cities and higher value of each loan size. HDFC’s average loan size is Rs 21.50 lakh compared with State Bank of India’s Rs 12 lakh. SBI is the country’s largest home loan lender.

Year-on-year, HDFC’s loan book grew 22 per cent to Rs 1,60,434 crore. In the quarter ended September 2012, the housing finance major’s loan book stood at Rs 1,55,128 crore.

Total income in the period ended December 2012 grew 17 per cent to Rs 5,242 crore (Rs 4,467 crore, a year ago).

Expenditure increased 18 per cent to Rs 3,705 crore (Rs 3,144 crore, a year ago).

Gross non-performing loans in December-end narrowed to 0.75 per cent (Rs 1,224 crore) of the loan portfolio compared with 0.82 per cent in the year-ago period, the company said in a statement. In the same period, HDFC provided Rs 1,783 crore to cover bad loans, Mistry said.

INTEREST RATES

Mistry said that if the Reserve Bank of India cuts policy rates in the current quarter, then housing finance companies may pass on the interest rate cuts, at least partially, to customers.

He said there is expectation that the RBI might cut policy rates by 25 basis points in the January policy review and by another 25 basis points in the March review.

Shares of Mumbai-based HDFC, closed at Rs 814.50, down 0.95 per cent on the Bombay Stock Exchange. The benchmark Sensex ended up 0.31 per cent at 20101.82 points.

satyanarayan.iyer@thehindu.co.in

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Federal Bank launches `Federal Manipal School of Banking'

Private sector lender, Federal Bank launched the Federal Manipal School of Banking at the Manipal University Bangalore Campus to provide student training on various areas of banking and management.

The Federal Manipal School of Banking will offer full-time programme for one year that includes nine months of campus training and three-month internship at a branch of Federal Bank, which will be coupled with grooming and soft skills training, the bank said in a statement.

Students will earn a monthly stipend of Rs 2,500 for the first 9 months and Rs10, 000 per month during their three month internship with the bank. Federal Bank will support full fee financing through education loans and loyalty bonuses, the statement added.

A post graduate diploma in banking and finance will be awarded by Manipal University to students at the end of the course and will be absorbed as probationary officers by the bank.

Abraham Chacko, Executive Director, Federal Bank said “This programme is aimed at providing the officers with that extra mile of knowledge and skills which will in turn aid to their excellence in banking and services.”

Beena.parmar@thehindu.co.in

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IndusInd Bank eyeing Rs 1,000-cr credit card biz

IndusInd Bank aims to touch Rs 1,000 crore in its credit card business by March 2014, according to Romesh Sobti, Managing Director and Chief Executive Officer, IndusInd Bank. That would be two per cent of their loan book then. At present the credit card portfolio is about Rs 380 crore.

Sobti said that the business is very profitable as it generates lot of ‘other income’ in the form of fees, foreign exchange business, transactions or issuance fees, etc. “Ours is a transaction-based model so spenders make the money for us...,” he said.

Deutsche Bank buy

IndusInd Bank had bought Deutsche Bank’s credit card business in 2011 for around Rs 224 crore. The bank’s active customer base during the acquisition was around 1.35 lakh.

“This base has grown, though not dramatically, but we have tried to deepen the existing relationship with customers. Currently, we issue about 4,000-5,000 cards every month.” Sobti said.

The acquisition has worked very well for the bank. “It has surprised us. We tried to rationalise a little bit on the cost structure and some rationalisation on the vendors’ side, so there was a cost reduction initially. But we gave stronger propositions to the card holders and there has been almost nil attrition,” Sobti said.

He added, “We see a profit before tax of about 50-60 crore this year. It was a small purchase, easily digested and profitable.”

On recovery mode

The credit card industry went through a difficult phase during the last four years when volumes shrank from 28 million cards to about 17 million about a year ago. It has just begun recovering in the last year and today volumes are around 18.3 million cards. Better underwriting standards, evolution of credit information bureaux such as CIBIL and greater compliance have improved the profitability for many players.

Sobti said, “Credit cards will be very profitable for the banks over the next five years as plastic money is proliferating. People even buy two-wheelers through a credit card and there is more compliance on the tax-side and more surveillance on the credit-card side.”

beena.parmar@thehindu.co.in

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Mundra is new CMD of Bank of Baroda

The Centre has appointed S. S. Mundra as Chairman and Managing Director of Bank of Baroda.

The appointment came nearly two months after M. D. Mallya, erstwhile Chairman and Managing Director had superannuated.

Prior to this, Mundra was Executive Director at Union Bank of India. His tenure as Chairman and Managing Director of BOB is till July 31, 2014.

Union Bank ED

The Centre has also appointed K. Subrahmanyam as Executive Director of Union Bank of India to fill up the vacancy due to Mundra’s elevation.

Subrahmanyam is currently General Manager, Indian Overseas Bank, and is due to superannuate in end-July 2015.

Srivats.kr@thehindu.co.in

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