KYC norms: Showcause notices to be issued for violation

The Reserve Bank of India will issue showcause notices to banks which transgressed Know Your Customer (KYC) guidelines.

This move comes after three private sector banks — ICICI Bank, HDFC Bank and Axis Bank — employees were allegedly caught in a sting operation by online magazine cobrapost.com offering to convert tax evaded money into legitimate money.

“First we will show the audit report to all the banks and ask them to explain. If we feel that their explanation is unsatisfactory, we will issue a show-cause notice and based on that we will take some action,” K.C. Chakrabarty, Deputy Governor, RBI, said.

Referring to the cobrapost allegations, RBI Governor D.Subbarao said that transgression of KYC norms does not mean money laundering has taken place.

“As soon as that (cobrapost allegations) came to light, we started special investigation and supervision against these specific banks as well as (undertook) thematic study of 30 other banks.

“A number of specific transgressions of norms have come to light. We don’t believe that there has been any money laundering; however there have been transgressions of some KYC norms,” Subbarao said.

The Governor said that the central bank has spoke to the chiefs of these banks and told them about the deficiencies. Subsequently, the bank officials went back and implemented some of those systemic improvements.

Based on the thematic study, Subbarao said that the central bank will issue guidelines about what banks need to do to adhere to KYC norms.

SBI Chairman Pratip Chaudhuri said RBI officials should conduct surprise check at branches to gauge KYC implementation.

satyanarayan.iyer@thehindu.co.in

Source: thehindubusinessline

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Kotak Mahindra net up 47% on robust loan growth

Higher interest income and robust loan growth helped Kotak Mahindra Bank post a 47 per cent increase in net profit at Rs 436 crore in the January to March quarter of 2013. The mid-sized private lender had posted a net profit of Rs 297 crore in the year-ago quarter.

Net interest income (difference between interest earned and expended) increased by 31 per cent to Rs 903 crore from Rs 688 crore in Q4 of 2012-13. Other income during the quarter rose 43 per cent to Rs 364 crore.

Total advances

The bank’s net profit in the full financial year increased 25 per cent to Rs 1,361 crore from Rs 1,085 crore in FY-12.

Total advances as on March 31, 2013 were up 24 per cent year-on-year to Rs 48,469 crore, while deposits increased 32 per cent to Rs 51,029 crore.

Net non-performing assets (NPA) ratio increased to 0.64 per cent from 0.61 per cent in the fourth quarter last year.

“The real economy continues to be slow. Therefore, going forward, banks will have to watch and make adequate provisions. Particularly, in the second half of 2013-14 we hope to see some pick-up in growth,” said Uday Kotak, Vice-Chairman and Managing Director, Kotak Mahindra Bank.

Other income

As on March 31, 2013, capital adequacy ratio of the bank as per Basel II was at 16.05 per cent with Tier I ratio at 14.7 per cent.

The bank’s consolidated full year profit increased 18 per cent to Rs 2,195 crore from Rs 1,867 crore in FY-12. This includes profit from its subsidiaries Kotak Mahindra Prime, Kotak Securities, Kotak Mahindra Capital.

The Board also approved a dividend of 0.70 per share (face value Rs 5 each) for the year ended March 31, 2013.

The bank’s shares ended at a new high of Rs 716.90 per share, higher by 1.60 per cent on the BSE on Thursday.

Source: thehindubusinessline

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PNB waives home loan processing fee

Punjab National Bank (PNB) has waived the processing fee on housing loans till June 30, 2013. This was disclosed by R.K. Chatterjee, Head of PNB-AP Circle at a builders’ conclave organised by the bank here. “We are offering personalised service and quick disbursement of advances through retail asset branches with special focus on housing loans and car loans,” he said.

Source: thehindubusinessline

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SBI comes to aid of Hyderabad blast victim kin

The kin of an unfortunate victim of Dilsukhnagar bomb blasts had an unexpected support in the form of a scheme of State Bank of India (SBI).

The parents of Harish Karthik Kadechur, who succumbed to injuries he sustained in the terror strike here on February 21 this year, approached SBI’s Gaddiannaram branch for closure of his savings bank account.

They, however, were not aware that his account was covered under a personal accident insurance policy for a cover of Rs 4 lakh from SBI General Insurance on premium of Rs 100 a year.

The branch manager informed the parents of insurance coverage and guided them to SBI General Insurance for claim Settlement.

The claim cheque of Rs 4 lakh was handed over to Indrani, the mother of Karthik on Thursday by bank officials, according to a release.

Source: thehindubusinessline

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Syndicate Bank profit jumps 91.42%

Syndicate Bank profits shot up 91.42 per cent to Rs 592.34 crore for the fourth quarter of 2012-13, compared with Rs 309.43 crore posted in the same period the previous year.

The bank’s total income for Q4 is up 8.05 per cent to Rs 4,780.75 crore (Rs 4,424.33 crore). The EPS stood at Rs 9.84 in Q4, over Rs 5.39 for the last fiscal.

M.G. Sanghvi, CMD, told reporters that the bank has pursued the strategy of reducing dependence on high-cost bulk deposits. “We have shed Rs 3,718 crore during the year 2012-13 (11.12 per cent) and brought down the level to Rs 29,715 crore from a high of Rs 33,433 crore.”

Profitability

Considering the profitability and taxable positions in subsequent years, the bank management has recognised the MAT credit entitlement of Rs 573.59 crore (previous year – nil and during the quarter Rs 114.02 crore) as assets by crediting to profit and loss.

The bank’s operating profit before provisions and contingencies increased by 2.34 per cent to Rs 901.13 crore, over Rs 880.45 crore last year. As for the asset quality, gross NPAs were at Rs 2,978.50 crore (Rs 3,182.70 crore), while the gross NPA ratio fell to 1.99 per cent from 2.53 per cent.

Net NPAs stood at Rs 1,124.77 crore (Rs 1,185.43 crore), while the net NPA ratio declined to 0.76 per cent from 0.96 per cent.

The net interest income (NII) for the quarter is marginally lower at Rs 1,336.66 crore from Rs 1,344.34 crore in the previous corresponding quarter. Net Interest Margin (NIM) was at 2.97 per cent in Q4, against 3.6 per cent in the corresponding quarter last year. Provisions and contingencies other than tax were reduced to Rs 363.79 crore from Rs 671.49 crore in the similar previous quarter.

Total business increased by 18.06 per cent to Rs 3,34,779 crore at the end of this fiscal (March 31, 2013) over last year.

Capital adequacy

Deposits increased by 17.36 per cent to Rs 1,85,356 crore. Total advances went up by 18.95 per cent to touch Rs 1,49,423 crore.

In terms of capital adequacy, the bank raised capital of Rs 1,000 crore in the form of Tier II bonds during 2012-13 and is comfortable with capital requirements under the forthcoming Basel III norms.

anil.u@thehindu.co.in

Source: thehindubusinessline

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Oriental Bank net up 16% in FY 12-13

Oriental Bank of Commerce (OBC) may go in for a rights issue this fiscal to raise capital to support business growth, its Chairman and Managing Director S.L.Bansal has said.

“We are keen on a rights issue. But a final call will be taken around September or October,” Bansal told Business Line soon after a Board meeting here.

OBC on Thursday reported a 16.33 per cent increase in net profit for the financial year ended March 31, 2013 at Rs 1,327.95 crore (Rs 1,141.56 crore).

The Board of Directors has declared a dividend of 92 per cent (Rs 9.2 for every share of Rs 10 each).

Bansal said that the bank is aiming at a net interest margin of 2.9 per cent for 2013-14. It had achieved a NIM of 2.82 per cent in 2012-13. For the current fiscal, the bank is eyeing deposit growth of 17 per cent and advances growth of 15 per cent.

In 2012-13, OBC saw its advances increase by 15 per cent and deposits go up by 17 per cent. Bansal expects RBI Governor D. Subbarao to cut the repo rate by at least 50 basis points on Friday.

The street expectation is, however, for a 25 basis point cut in repo rate.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Andhra Bank’s Q4 net up 1.5% at Rs 345 crore

Andhra Bank’s net profit increased 1.5 per cent at Rs 345 crore in the fourth quarter ended March 31, 2013 compared with Rs 340 crore in the same period last year.

Total income grew 15 per cent at Rs 3,713 crore (Rs 3,229 crore). Deposits and advances grew at 17 per cent and 18.4 per cent respectively while net interest margin was in the range of 3.04 per cent.

Profit came under pressure due to provisions for new non-performing assets, wage settlements and pension, its Chairman and Managing Director, B.A. Prabhakar told news-persons here on Thursday.

The net NPAs increased to 2.45 per cent from 0.91 per cent previous year due to some slippages in the corporate segment, he said.

Non-corporate credit

For the financial year 2012-13, net profit declined to Rs 1,289 crore from Rs 1,345 crore in the previous year.

“Last year’s environment was not conducive for growth. We focused on non-corporate credit growth, which is not vulnerable to economic shocks,” he said adding that agriculture, MSME and retail would be focus areas for bank.

“We will contain corporate credit and avoid project-based funding,” Prabhakar said.

The operating profit would be better in the current quarter due to an expected credit growth at 18 per cent and increase in other come due to continued good performance by the treasury, he added.

The net interest margin could be around 3 per cent for FY14 with a targeted business growth of 20 per cent.

The bank plans to open 200 new branches this year. Last year, it opened 160 branches. It will recruit 2,400 officers and clerks this year.

Andhra Bank’s scrip gained 2.19 per cent on the Bombay Stock Exchange on Thursday to end at Rs 93.20.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Shedding bulk business pushes Canara Bank Q4 net down 12.5%

Canara Bank profits declined by 12.5 per cent to Rs 725.38 crore for the fourth quarter (Q4) 2012-13, compared with the previous year's fourth quarter.

However, the bank’s total income for Q4 is up 4.81 per cent to Rs 9,471.57 crore (Rs 9,036.75). While the EPS (basic) was Rs 16.37 in Q4 financial year 2012-13, it was Rs 18.72 for the previous year’s period.

R.K. Dubey, the bank’s CMD, said: “The lower business growth of the bank was due to a conscious decision taken to de-risk the balance sheet by shedding a substantial portion of bulk business, both on preferential rate deposits and certificates of deposit (CDs) (Rs 74,500 crore) as well as short-term unsecured loans (Rs 22,000 crore), totalling Rs 96,500 crore.” The bank’s operating profit before provisions and contingencies increased by 13.88 per cent to Rs 1,697.73 crore, compared with Rs 1,490.70 crore the previous year.

Asset quality

In terms of asset quality, gross NPAs were Rs 6,260.16 crore (Rs 4,031.75 crore in the same period the previous fiscal), and the percentage of gross NPAs is 2.57 per cent (1.73 per cent).

Net NPAs stood at Rs 5,278.07 crore (Rs 3,386.31 crore), while the percentage of net NPAs is 2.18 per cent (1.46 per cent).

Net interest income (NII) for the quarter was Rs 2,091 crore, better than the 2.5 per cent over Q4-FY12 (Rs 2,040 crore).

Net interest margin (NIM) of the bank as at March 2013 is 2.40 per cent (2.5 per cent end March 2012). Provisions and contingencies other than tax increased to Rs 752.35 crore from Rs 461.61 crore in the corresponding quarter of the previous year. The bank’s total deposits at the end of FY 2012-13 stood at Rs 3,55,856 crore compared to Rs 3,27,053.73 crore the previous year. Advances of the bank reached a level of Rs 2,42,177 crore (Rs 232489.82).

Enough headroom

The bank’s current and savings account (CASA) deposits to domestic deposits stood at 25.1 per cent, the same level as in the previous fiscal.

As at March 2013, the capital adequacy ratio (CAR) was 12.4 per cent (against the mandatory 9 per cent), with Tier I capital ratio at 9.77 per cent (mandatory level - 6 per cent).

Canara Bank has made adequate headroom available under both Tier-I and Tier-II options to raise capital and support business growth momentum.

anil.u@thehindu.co.in

Source: thehindubusinessline

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IOB to focus on increasing CASA, NPA recovery

Indian Overseas Bank (IOB) said it will focus on increasing the share of the low—cost deposit base along with recovery of bad assets to contain NPA in the current financial year.

“Our major focus will be on enhancing current account, savings account (CASA) base with higher recovery from bad assets to contain NPA (non—performing asset) in the current financial year,” Chairman and Managing Director of the Bank M Narendra told reporters here.

The public sector lender, which had witnessed 89 per cent drop in net profit in the fourth quarter to Rs 59 crore due to rise in bad assets, has set a target to recover around Rs 2,500 crore in the ongoing fiscal.

IOB’s gross NPA rose to 4.02 per cent by the end of March 2013 from 2.74 per cent in FY12. Net NPA increased to 2.50 per cent from 1.35 per cent reported a year ago.

Referring to recoveries from debt—ridden Kingfisher Airlines account, Narendra said the bank had retrieved around Rs 11 crore from this loan account from a total exposure of Rs 143 crore.

He said the restructuring pipeline was likely to be around Rs 1,400 crore in FY14.

On low—cost deposit base, Narendra said the bank would try to ramp up its CASA base in the current fiscal. “We reduced our bulk deposit base to 15 per cent in the last fiscal. This year, our focus will be on increasing CASA base.”

The bank’s low—cost deposit base, or CASA, stood at 26.51 per cent by the end of March 2013.

Referring to growth in FY14, the bank said it expects an expansion of 15—18 per cent in advances though this will depend on the overall interest rate environment.

Source: thehindubusinessline

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Deepak Parekh steps down as IDFC chairman

Deepak Parekh, non-Executive Chairman of infrastructure financing company IDFC, has stepped down from his post.

The veteran banker was with the company since its inception in 1997.

The decision was taken in order to “create more time for himself and to participate more on the national and the international level,'' according to sources close to Parekh.

Speaking to Business Line, an official said since August 2011, Parekh has resigned from around eight boards.

Notable amongst these were Lafarge, Castrol and Hindustan Unilever, where he had the longest stint of around 14 years.

Parekh continues to be non-executive chairman of GlaxoSmithkline Pharmaceuticals and Siemens India. He is also on the board of Mahindra & Mahindra and Indian Hotels Company, in addition to the international board of port major DP World (UAE).

Parekh has been recently appointed to five high-powered Government-appointed advisory committees.

Parekh would, however, continue to be associated with IDFC as chair of the advisory council to be formed in the next few months.

Rajiv Lall, Vice-Chairman and Chief Executive Officer of the company, has taken over as Executive Chairman, while Vikram Limaye is to be the new Managing Director and CEO.

amritanair.ghaswalla@thehindu.co.in

Source: thehindubusinessline

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Let SEBI oversee chit funds till regulator is put in place: Sinha

The Securities and Exchange Board of India has sought powers to regulate chit funds and nidhi companies (mutual benefit societies) till a regulator for these outfits is put in place.

At present, chit funds are regulated by State Governments , and nidhi companies by the Ministry of Corporate Affairs.

With the Saradha chit fund scam in West Bengal leaving thousands of depositors in the lurch, there is now a growing demand to create a strong regulatory mechanism. SEBI, therefore, feels there is a need for a single regulator for both chit funds and nidhi companies. Till such an arrangement is made, “I have requested the Government to strengthen the SEBI Act in the interim through amendments,” SEBI Chairman U. K. Sinha said on the sidelines of a meeting of the Asia-Pacific Committee of IOSCO, a global body of securities regulators.

He said such an arrangement would bring chit funds and nidhi companies under SEBI, enabling the regulator control the mushrooming of such funds that lure people by offering high rates of return only to vanish.

SEBI has already passed an order against Saradha Realty India, directing closure of all its collective schemes and refunding investors’ money within three months. The market regulator has also barred the company’s Managing Director Sudipta Sen from the securities markets till the firm wound up all its Collective Investment Schemes (CIS) and returned the money to investors.

The Government, Sinha said, is looking to strengthen laws to regulate all kinds of CIS. On January 18, the SEBI board had approved a proposal for more powers and sent the same to the Finance Ministry for further action.

It also wants powers to attach assets/properties and search/seizure powers without recourse to the court of law. All these require amendments to three pieces of legislations — the Securities and Exchange Board of India Act, 1992; the Securities Contracts (Regulation) Act, 1956; and the Depositories Act, 1996.

shishir.sinha@thehindu.co.in

Source: thehindubusinessline

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Deutsche Bank posts solid Q1 profit, decides to raise capital reserves

Deutsche Bank’s co-CEO says the bank decided on a $5.2 billion capital increase so it could meet its goals for stronger financial reserves “in one fell swoop.”

Anshu Jain said today the increase was “a tremendous opportunity and one we felt we had to take.”

Investors appeared to agree: Shares in Germany’s largest bank soared 7.0 per cent in morning trading in Europe.

Jain’s comments made in a conference call with investment analysts come a day after the company announced plans for the capital increase. The measures include 2.8 billion euros from issuing 90 million new shares and up to another 2.0 billion euros from other financial instruments.

The bank also announced better-than-expected first—quarter earnings.

The increase means the bank will meet new capital requirements well ahead of the 2019 deadline under the international agreement known as Basel III. It said it now had more robust finances than its global peers.

The move will take the bank’s Core Tier 1 capital ratio a key measure of financial reserves from 8.8 per cent to 9.5 per cent. That meets the capital requirement under the international banking rules known as Basel III and keeps the bank on course to meet its own internal goal of 10 percent in 2015, the bank says.

The move will also calm long—running investor concerns over the bank’s relatively lower levels of capital buffers compared to other big banks.

Deutsche Bank had held off raising capital through a share issue and sought instead to increase its buffer through other means such as selling risky assets. Share issues are often be unpopular with investors because they can dilute shareholder holdings.

Jain said the bank had made enough progress using other methods to put the bank in a position where a share increase would achieve its targets. “What has changed is the very rapid progress we have made on organic capital formation,” he said.

Regulators around the world are pushing banks to keep more capital as buffers against unexpected losses as a way of strengthening the financial system and avoiding a repeat of the 2007—2009 financial crisis.

Source: thehindubusinessline

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State Bank of Patiala net dips 16% in FY13

Public sector lender State Bank of Patiala (SBOP) reported 16 per cent dip in its net profit to Rs 666.76 crore for the fiscal ended March 31, 2013, on account of stressed assets and hike in employee cost.

The bank had reported a rise in net profit at Rs 796.45 crore in the previous fiscal, it said in a statement.

Bank’s gross and net NPA went up to 3.25 per cent and 1.62 per cent in 2012-13 compared to 2.94 per cent and 1.35 per cent in 2011-12, respectively, it added.

“Our absolute NPA was Rs 1,194 crore and our efforts will be to bring the net NPA by 1 percentage in this fiscal,” bank’s Managing Director Achal Kumar Gupta said here.

However, he said default in loans was not industry sector specific rather it was unit specific. “We have NPAs in corporates and agriculture,” he said.

Though bank’s employee per business rose to Rs 10.14 crore in last fiscal, the bank’s employee cost also shot up to Rs 959.49 crore in 2012-13, up from Rs 834.75 crore as on March 31, 2012, he added.

With bank having branch strength of 1,121 across the country, the State Bank of Patiala would open 100 new branches in this fiscal.

“We have plans to open 100 more branches in this fiscal in order to strengthen its presence in Punjab, Haryana, Himachal Pradesh and other parts of the country,” he said.

The bank also said it would aim at 20 per cent growth in overall business of the bank in 2013-14 with a focus on increasing lending to agriculture, retail and fast recovery of debt.

“We have yet to firm up a plan for current fiscal but we will aim at 20 per cent growth both in deposits and advances,” Gupta said.

The bank’s total deposits grew by 11.70 per cent at Rs 88,416 crore while advances mobilisation was up by 17.65 per cent at Rs 75,460 crore in last fiscal, he said.

“It was our conscious policy of not being aggressive in deposits (mobilisation) as we intended to lower our cost of bulk deposits which was higher last fiscal,” Gupta said when asked why the deposits growth was lower in last fiscal.

“Our focus during current fiscal will be on enhancing farm advances, retail advances and recovery of debt,” he said.

Gupta further said the bank’s priority will also be to enhance ratio of CASA (Current Account Saving Account), aimed at lowering cost of deposits. “We want to raise our CASA ratio from 25 per cent to 30 per cent in this fiscal,” he said.

Source: thehindubusinessline

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Provisioning for bad debt pushes IOB net down 88%

The net profit of Indian Overseas Bank plummeted by 88 per cent to Rs 59 crore for the quarter ended March 31, 2013, against Rs 529 crore in the corresponding quarter last year.

The decline was an outcome of provisioning for bad and doubtful debts and restructured accounts, said Chairman and Managing Director M. Narendra.

Total income was Rs 5,898 crore — a 8.92 per cent increase over the same quarter last year.

For the financial year ending March 31, 2013, net profit was down by nearly half, to Rs 568 crore from Rs 1,050 crore the previous year. Total income was Rs 22,649 crore (Rs 19,578 crore).

Higher NPA

The bank’s gross non-performing assets (NPAs), or loans in jeopardy of default at the end of the financial year, increased to Rs 6,607 crore, against Rs 3,920 crore the previous year.

“It was a difficult period. Not many companies came forward to restructure their loans,” Narendra told newspersons.

Narendra said the NPAs of international clients have gone up substantially. “We are going for speedy recovery this year,” he said.

On the domestic front, the NPAs were mainly with small and medium businesses that are going through tough market conditions.

“This year, we should be able to contain the NPA level,” Narendra said.

The bank is cautious on bulk deposits, which have dropped to 11 per cent from 35 per cent. However, core deposits have increased substantially, he said. “This trend is a good sign for the bank and has helped in overall business growth,” he said.

Our Coimbatore Bureau adds: The IOB share price, hovering around Rs 68 for most of the day, took a sharp dive once the results were flashed on the Web sites of stock exchanges just after 3 pm and crashed to a 52-week low of Rs 62.20 on the BSE before pulling back marginally to Rs 63.70 at close.

The stock shed a third of its value in three months after touching a 52-week high of Rs 94.85 on January 7. The bank has cut the dividend payout by half to Rs 2 (Rs 4.50 last year).

Commenting on the results, Vaibhav Agrawal, VP, Banking, Research, Angel Broking, Mumbai, said the bank had reported a “disappointing operating performance” for Q4 of last year.

Asset quality

He felt that because of the asset quality pressures, provisioning expenses had more than trebled on a y-o-y basis, leading to earnings decline by 89 per cent y-o-y.

He said ‘more clarity from the management’ was being awaited about the asset quality pressure faced during the quarter.

raja.simhan@thehindu.co.in

Source: thehindubusinessline

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McKinsey to revamp Corp Bank biz

Public sector Corporation Bank has roped in consulting major McKinsey to revamp its business process re-engineering and also to effect organisational transformation.

“The re-engineering and organisational transformation titled ‘Sankalp’ aims to build digitally-enabled, customer centric operating model which will help the bank to embark on an accelerated growth path,” said Ajai Kumar, Chairman and Managing Director of Corporation Bank.

Declining to reveal the project cost, Kumar said existing branches are to be re-modelled, streamlining the centralised units and re-designing the core process, strengthening bank’s alternate-channel architecture.

Source: thehindubusinessline

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ING Vysya Bank’s Q4 profits up 33.7%

ING Vysya Bank’s net profit for fourth quarter (Q4) of FY 2012-13 increased by 33.7 per cent to Rs 170.3 crore compared to Rs 127.4 crore same period of the previous year.

Bank’s total income for Q4 is up 20.9 per cent to Rs 624.1 crore.

Other income increased to Rs 200.4 crores. Operating costs in the quarter increased by 14.9 per cent to Rs 339.8 crore. Staff cost for the quarter includes provision towards the 10th Bipartite settlement between the IBA and bank unions.

Operating profit increased by 29.0 per cent to Rs. 284.3 crore and cost to income ratio improved to 54.4 per cent from 57.3 per cent.

Shailendra Bhandari Managing Director, said: “For the Quarter, net interest margin improved to 3.73 per cent and ROA improved to 1.34 per cent. Our asset quality continues to be best in class with Gross NPA at 1.76 per cent, Net NPA at 0.03 per cent.”

Net Interest Income (NII) for the quarter increased by 32.7 per cent to Rs 423.7 crore from Rs 319.2 crore in the corresponding quarter of the previous year.

The Net Interest Margins (NIM) was significantly higher at 3.73 per cent from 3.29 per cent in the corresponding quarter of the previous year.

Provisions and contingencies reduced to Rs 33.6 crore from Rs 56.6 crore in the corresponding quarter of the previous year. Provisions for the quarter included provision of Rs.21.9 crores related to mark to market receivable on the derivatives contract mentioned in the footnote.

Total Deposits were Rs. 41,334 crores at the end of March 2013, up 17.4 per cent from Rs 35,195 crore as at the end of March 2012.

Current and Savings (CASA) deposits grew by 11.4 per cent to Rs 13,435 crore from Rs 12,063 crore as at end of March 2012. CASA ratio was at 32.5 per cent of total deposits as at the end of March 2013. However, after adjusting for certain large CASA flow towards the end of the year, core CASA would have stood at 31.8 per cent.

The Credit Deposit Ratio (including customer assets) stood at 81.7% as at March 2013 as against 81.8% as at March 2012.

anil.u@thehindu.co.in

Source: thehindubusinessline

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Corporation Bank rating branches based on performance

When you meet your Corporation Bank manager next time, ask him/her about the rating of the branch.

Is it five-star or nil? The manager might say five-star, if the branch had done extremely well in the 17 parameters set by the bank. For the manager, the competition is no longer from outside. It is within the organisation.

Ajai Kumar, Chairman and Managing Director of Corporation Bank, told Business Line that the bank has started rating its branches based on their performances. The best performers will be awarded, and corrective measures will be initiated in the case of poor performers.

As business profiles vary depending on whether they are rural, semi-urban, urban or metro branches, the bank has given different weightages for the 17 parameters in each of these segments.

For example, more weightage has been given for savings bank (SB) accounts in rural branches and less for current account (CA) deposits. In the case of metro branches, weightage is more on CA deposits and less on SB accounts.

If the overall score of all the 17 parameters is 100, the score for average SB deposits is assigned at six for rural branches and four for metro branches. In the case of average CA deposits, the score is three for rural branches and six for metro branches.

More weightage is given for agriculture lending in rural branches and less in metro branches.

The heads of 31 zones of the bank have been asked to review the performance on a weekly basis. The bank is taking the incremental performance of the branches into consideration in this ranking, and not the terminal or the quarter-end or year-end figures, he said.

Data analysis

Stating that the biggest differentiator today is the data analysis, Ajai Kumar said: “If your analytics are strong, it will give you real-time information where things are not happening and will help take corrective actions,” he said.

Earlier branch reviews used to be full of power-point presentations taking hours together. With the introduction of this system, the weak points in the branch can be identified within minutes, he said.

The rating analytics help the bank to work out strategies to improve low-ranked branches.

The bank has decided to give awards to the top three branches in each zone that have achieved not less than three-star rating. Now there is competition among all branches to become star performers, he added.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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Federal Bank net down 7% on higher provisions

Old private sector lender Federal Bank’s net profit fell seven per cent to Rs 222 crore on the back of higher provisions towards bad loans and lower interest income.

The Kerala-based bank had reported a net profit of Rs 238 crore in the year-ago period.

Marginal fall

Net interest income (difference between interest earned and expended) during the quarter declined marginally by two per cent to Rs 480 crore compared with Rs 491 crore in the fourth quarter in FY12.

However, other income increased 23 per cent to Rs 197 crore in the fourth quarter in FY13 from Rs 161 crore in the corresponding period in FY12.

Provisions during the quarter increased nine per cent to Rs 148 crore compared with Rs 135 crore in March quarter last year.

Net profit for the year ended March 2013 rose eight per cent to Rs 838 crore from Rs 777 crore last year.

Net interest income in FY13 increased marginally to Rs 1,975 crore compared with Rs 1,953 crore in FY12.

As on March 31, 2013, total advances increased 17 per cent to Rs 44,097 crore, while deposits increased 18 per cent to Rs 57,615 crore.

Net interest margin (NIM) as on March 31, 2013, stood at 3.37 per cent.

Net non-performing assets increased to 0.98 per cent as on March 31, 2013, from 0.53 per cent as on March 31, 2012.

Dividend

The board has proposed a dividend of Rs 9 per equity share (face value of Rs 10 each) for the year ended March 31, 2013.

The shares of Federal Bank ended 1.73 per cent higher at Rs 462.30 on the BSE.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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