BoM Q1 net jumps 89.6%

Pune-based Bank of Maharashtra has posted a 89.6 per cent rise in net profit in the first quarter of this fiscal at Rs 266.33 crore against Rs 140.46 crore in Q1 of FY13.

Total income in the quarter grew 34.14 per cent to Rs 2,974 crore (Rs 2,217 crore).

Announcing the results, Narendra Singh, Chairman and Managing Director of the bank, said the bank had asked the Centre for a capital infusion of Rs 2,200 crore this year. “We expect to get this next month,” he said, adding that permission sought for Qualified Institutional Placements (QIPs) is pending with the Government. BoM plans to raise Rs 200 crore through this.

The capital will help raise its core capital adequacy ratio (CAR), which currently stands at around 7.57 per cent. Its overall CAR under Basel II norms as of end-June was 11.83 per cent. At the end of Q1 of this fiscal, the bank’s gross NPA ratio fell 44 basis points (bps) to 1.8 per cent, while the net NPA was 17 bps lower at 0.8 per cent.

Singh refuted reports that the Government had asked the bank for any explanation regarding the steep rise in its credit growth.

The new initiatives planned include launching of Maha Aasra, a reverse mortgage product aimed at senior citizens, opening 225 new branches the fiscal, and extending doorstep banking.


Source: thehindubusinessline

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Vijaya Bank pays dividend

Vijaya Bank paid dividend of Rs 170.16 crore to Government of India for the Financial Year 2012-13.

At an event in Delhi, HS Upendra Kamath, CMD, Vijaya Bank presented a cheque to Union Finance Minister P Chidambaram.

Kamath was accompanied by K R Shenoy, ED, Vijaya Bank to Honb’le Finance Minister Shri P. Chidambaram and Minister of State (Finance), Namo Narayan Meena and Harideesh Kumar, RM, Delhi, Vijaya Bank was present.


Source: thehindubusinessline

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Loan quality will be under stress this fiscal: Exim Bank

Export-Import (Exim) Bank of India sees stress on asset quality to continue during this fiscal.

The Government-owned bank expects its non-performing assets (NPA) to be slightly higher this fiscal, as compared to last year.

“Asset quality stress has not peaked as yet. We are likely to add some more (accounts slipping into NPS) this year. However, starting next year, the stress on asset quality should be largely out,” David Rasquinha, Executive Director of Exim Bank said.

Rasquinha was talking to newspersons after an interactive session on ‘Financing options for project exports’ here on Friday.

As on March 31, 2013, Exim Bank’s net NPA grew to 0.47 per cent as against 0.29 per cent as in FY12.

Its restructured account portfolio stood at Rs 3,000 crore last fiscal. Exim Bank is likely to restructure some more accounts this fiscal.

With asset quality continuing to be under stress, Exim Bank will look at reorienting its projects, step up recovery and if need be tinker with interest rates to maintain its profitability, he said.

Exim Bank is eyeing 15-20 per cent growth in its loan portfolio this fiscal. Its loan book grew by 20 per cent to Rs 66,000 crore in 2012-13.

Rasquinha said the growth in loan book will come from two segments – lines of credit and long-term buyer’s credit.

“We grew by 20 per cent last year. It is still too early to comment on the growth rate this year, however, we expect 15-20 per cent growth in loan book,” he said.

Exim Bank was laying emphasis on pushing sustainable exports, particularly in the projects sector. Sri Lanka, Bangladesh, Ethiopia, Nepal and Mozambique were some of the major markets for project exports for Exim Bank, he said.

Exim Bank will shortly open an office in Myanmar, he added.

shobha.roy@thehindu.co.in

Source: thehindubusinessline

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HDFC targets Rs 2,400 cr disbursal to rural farmers

Housing finance major HDFC has said it aims to lend Rs 2,400 crore in current fiscal in Punjab, Haryana, Chandigarh and Himachal Pradesh with main thrust being on aggressive lending to farmers to meet growing demand for housing in rural areas.

HDFC has planned to penetrate deeper by targeting tier II cities of two agrarian states of Punjab and Haryana where the demand for affordable housing is still going strong.

“We are targeting to disburse loans for housing to the tune of Rs 2,400 crore which is over 30 per cent more than what was disbursed last fiscal in our area comprising Punjab, Haryana, UT Chandigarh and Himachal Pradesh,” HDFC, Business Head, (Punjab, Haryana, HP) P C Srivastava said.

HDFC disbursed loans amounting to Rs 1,800 crore in last fiscal in these areas.

Srivastava said that the HDFC is now aggressively looking to tap progressive farmers in rural areas for housing loans especially in Punjab and Haryana where the demand for housing projects still exists.

“We have developed a successful model in which we assess farmer’s income after considering his land holding (minimum 10 acres), crop yield and MSP of the crop and then after working out his income, loan is disbursed,” he said adding that the default among farmers has been nil.

“We have plans to double our lending to Rs 200 crore to farmers in current fiscal,” he said adding, “HDFC even offers concession on lending rate to farmer for buying rural property.”


Source: thehindubusinessline

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Bank of Baroda: Overseas business lifts growth

An overseas presence spanning 24 countries has consistently helped Bank of Baroda grow at higher rates than the overall banking industry in the past. In the latest quarter ending June, the bank’s loan growth slowed to 12 per cent, but was driven mainly by the overseas market. The quarter saw overseas advances grow by 18 per cent, contributing almost a third of the loan book.

Domestic loans however, grew by only 10 per cent. Within this, retail and small and medium enterprises (SMEs) drove growth. The bank’s strong presence among SMEs in Rajasthan, Uttar Pradesh and Uttarakhand continues to help it log a healthy growth rate in this segment.

For this fiscal, the management expects the bank to grow 1-2 percentage points above the industry average. However, tapering domestic loan growth may make this a tough task.

Like every other public sector bank, Bank of Baroda too, witnessed a surge in loan delinquencies during the quarter ending June. Additional slippages of Rs 1,960 crore and lower recoveries led to an increase in non-performing assets.

The stress in large industries, SMEs and agriculture segments continued to remain high. Restructured loans of Rs 2,000 crore during the quarter added to the bank’s stressed assets.

Prudently though, the bank has fully provided for its restructured assets instead of apportioning them over the next four quarters.

Shedding high-cost deposits worth Rs 22,363 crore helped reduce costs and offset some of the pressure on declining yields. The low-cost current account and savings account (CASA) constitutes a healthy 31 per cent of overall deposits.

While the next two to three quarters will continue to witness pressure on asset quality, Bank of Baroda still remains among the better capitalised public sector banks with Tier-I capital adequacy of 9.7 per cent.

At Rs 487 per share on the BSE, the stock trades at a comfortable 0.8 times one-year forward adjusted book value, lower than its historic average of 1.1 times.


Source: thehindubusinessline

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RBI asks banks to rev up ATM service

To further improve customer service through enhancement of efficiency in ATM operations, the Reserve Bank of India has asked banks to make available sufficient toll-free phone numbers for lodging complaints/reporting and blocking lost cards. This is to avoid delays and also attend to the requests on priority. Local helpline numbers (city-wise / centre-wise) should also be increased and should be prominently displayed in the ATM premises/banks’ Web site. Banks are required to display ATM ID clearly in the ATM premises to enable a customer to quote the same while making a complaint / suggestion. The message regarding non-availability of cash in ATMs should be displayed before the transaction is initiated by the customer. Banks may exercise option to display such notices either on screen or in some other way.


Source: thehindubusinessline

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Royal Bank of Scotland picks new head, returns to profit

State-rescued Royal Bank of Scotland promoted New Zealander Ross McEwan, its head of retail business, to be the new chief executive today when it also announced a return to profit.

RBS, 81-per cent owned by the British taxpayer, said that McEwan would take charge from October, replacing Stephen Hester who recently announced he would step down before the bank returned to the private sector.

“The Royal Bank of Scotland Group plc announces today that Ross McEwan has been appointed as a director and group chief executive with effect from 1 October 2013,” the Edinburgh-based bank said in a statement.

McEwan, 56, will receive an annual salary of £1.0 million ($1.5 million, 1.14 million euros). He will receive also a cash allowance in lieu of a pension totalling 35 per cent of his salary.

While he is eligible to receive a long-term incentive award in 2014, McEwan does not wish to be considered for an annual bonus in 2014 or for the remainder of 2013, the statement said.

RBS announced that it had posted a net profit of £535 million in the six months to the end of June compared with a loss after tax of £2.0 billion in the first half of 2012.

“Five years on from its rescue, RBS is now a safe and strong bank — our focus is now on building a really good bank for our customers and shareholders, returning the bank to private ownership, and playing our full part in supporting the UK economy,” RBS chairman Philip Hampton said today.

“The board and I very much look forward to the fresh perspective Ross will bring to achieving these goals. I would like to thank Stephen Hester for his dedication to RBS and congratulate him on his success in turning this bank around,” Hampton added.

McEwan, who joined RBS as head of its retail banking operations only last September, said it was “a privilege to lead a bank that matters to so many“.

He added: “We have a lot of work ahead of us and I’m very much looking forward to getting started.”

Currrent RBS chief executive Hester surprised markets in June by announcing that he was stepping down later this year.

His departure, reportedly at the request of Britain’s coalition government led by Prime Minister David Cameron, has sparked questions about the strategy for the state-rescued bank.

Analysts believe that British finance minister George Osborne wanted a new face to help guide Royal Bank of Scotland’s return to private ownership, which is not expected until late 2014 at the earliest.

RBS was rescued with £45.5 billion of British taxpayer cash at the height of the 2008 global financial crisis under the then Labour government, making it the world’s biggest-ever banking bailout.

Hester has earned the respect of the business community by axing 41,000 jobs, selling non-core assets and transforming the bank’s balance sheet.

At the same time, unions have been scathing of his management, especially as the massive jobs cull occurred alongside Hester earning millions of pounds in salary and bonuses during his five years in charge.


Source: thehindubusinessline

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SBI gets first woman MD

The Centre has appointed Arundhati Bhattacharya as a Managing Director of State Bank of India (SBI), the country’s largest commercial bank. She is the first woman Managing Director of SBI and is also tipped to be the Chairperson of the bank when incumbent Chairman, Pratip Chaudhuri, retires in end-September. Prior to this appointment, Bhattacharya was Managing Director and Chief Executive of SBI Capital Markets, the merchant banking arm of SBI.

Currently, SBI has four Managing Directors. Bhattacharya has replaced Diwakar Gupta, who was Chief Financial Officer and Managing Director of the bank and retired in end-July.

A search and selection panel comprising Rajiv Takru, Financial Services Secretary, Anand Sinha, Deputy Governor of Reserve Bank of India, and a professor from Indian Institute of Management, Ahmedabad, among others, had in June interviewed candidates for the SBI Managing Director post.

The search panel had recommended Bhattacharya’s name, which was approved by the Finance Minister.

Source: thehindubusinessline

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Indian Bank to set up 9 more branches in Vizag zone

Indian Bank is setting up nine more branches in the Visakhapatnam zone and is also focussing on financial inclusion to take banking services to villages, according to Chief Manager M. Sudhakar Reddy.

He said here on Sunday that the bank was adding nine more branches to the existing 62 in the zone covering Srikakulam, Vizianagaram, Visakhapatnam, East Godavari and West Godavari districts.

Branches would be opened at Gopalapatnam in the city, Chitrada near Kakinada and at Tantikonda near Gokavaram in East Godavari before September.

“We are opening branches at Anandapuram near Vizag and Penumantra near Tanuku (West Godavari), and also at Rajahmundry, Sarpavaram, Draksharamam and Jaggampeta in East Godavari. These branches would be set up before the end of the financial year,” he said.

Sudhakar Reddy said the bank was setting up 52 ultra small branches in villages with population above 2,000 and business correspondents in 153 villages with population below 2,000. The bank has advances of Rs 2,500 crore and deposits of Rs 2,300 crore in the zone.

sarma.rs@thehindu.co.in

Source: thehindubusinessline

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Applications for Exim Bank CMD

The Finance Ministry has invited applications for the post of Chairman and Managing Director of Exim Bank of India.

The candidates should be suitably qualified and experienced and not more than 55 years of age, as on December 1, 2013, the Finance Ministry has said.

Applicants will be screened and shortlisted by a screening committee, whose decision will be final. The Exim Bank CMD shall hold office for a term up to five years from the date on which he assumes his office or until he attains 60 years, whichever is earlier.

Besides experience of at least two years as wholetime directors in the financial sector with sufficient experience in financing of international trade, the applicant should have experience of institutional development in financial, banking, services sector or a public sector undertaking.

Source: thehindubusinessline

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Muthoot Finance plans NCD issue

Gold loan company Muthoot Finance Ltd plans to tap the market with a public issue of non-convertible debentures (NCDs), its Managing Director, George Alexander Muthoot, said.

“We are going to soon file the papers (with the regulator) for this issue. The actual amount to be raised has not been decided as yet,” Muthoot told Business Line. The issue may take place in the next 10 days, he indicated.

For Muthoot Finance, this will be the fifth NCD issue. The company had already come up with four listed NCD issues in recent years.

Muthoot, however, pointed out that the company was comfortable on the capital front and there was no urgent requirement for funds.

The company is eyeing a 10 per cent increase in assets under management this fiscal, he added.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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HDFC Bank to open more branches in rural areas

HDFC Bank will be focusing on having a greater number of new branches in the semi-urban and rural areas, and is targeting to take the total proportion of such outlets to 60 per cent in three years, according to a top official.

“In the next three to four years, the number of semi-urban and rural branches will go up till 60 per cent from the present 54 per cent,” HDFC Bank Executive Director Paresh Sukthankar told PTI in an interaction.

He said around 80 per cent of the approximately 300 new branches which the bank will be opening this year will be in such areas.

It can be noted that due to the excessive concentration of banking in the urban areas, and the neglect of the un-banked or the under-banked areas thereof, the regulator has asked banks to open a fourth of their new branches in such areas. The stipulation applies even for the new banks.

Sukthankar said apart from meeting the regulatory requirements on the number of branches and contributing to its priority sector lending requirements.

With a newer set of banks expected to enter business, it will also help in securing better customers, he said.

When asked about the costs associated with such a move and if this focus will hurt the operations cost, Sukthankar said that the cost of opening such branches is lower than that in the city.

Unlike other banks, which enter such areas with offering only a few products, HDFC Bank goes with its entire bouquet of products which helps it increase the income and fees from a particular branch, he said.

The rural branches will also help the bank in its sustainable livelihoods banking initiative, wherein it gives micro credit to skilled people, trains them in a discipline and also marketing the goods, he said.

Source: thehindubusinessline

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Dena Bank net declines 21% to Rs 189 cr

State-owned Dena Bank has reported a 21 per cent decline in net profit at Rs 189.20 crore for the first quarter ended June 30, 2013.

The bank had earned a net profit of Rs 238.63 crore during April-June quarter of 2011-12, Dena Bank informed the BSE.

Total income rose to Rs 2,765.68 crore from Rs 2,278.85 crore.

As of June 30, 2013, Dena Bank’s portfolio quality deteriorated, with gross non-performing assets (NPAs) rising to 2.7 per cent of gross advances against 1.80 per cent in the same quarter of the previous fiscal.

Its net non-performing assets also rose to 1.74 per cent from 1.01 per cent. The bank’s capital adequacy ratio as of June 30, 2013 stood at 11.12 per cent.

Source: thehindubusinessline

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Banks roll back interest rate cut ahead of RBI monetary policy review

Barely three weeks after the banks rushed in to cut the deposit rates in the wake of cut in base rate (base rate is the minimum lending rate below which banks could not lend to any borrower), the reverse appears to be happening with the banks starting to raise the deposit rates and put on hold the decision to cut base rate.

What is significant is that this trend has begun ahead of the policy review by RBI Governor D. Subbarao on July 30 and at least one bank Chairman (State Bank of India CMD Pratip Chaudhuri) has openly expressed the view that it is better to hike interest rates rather than smother liquidity with a view to shore up the Indian rupee.

Punjab & Sind Bank rolls back decision

The public sector Punjab & Sind Bank had yesterday announced the rollback of its earlier decision on July 9 to reduce the interest rates by 25 basis points (0.25 per cent).

In a notification to the stock exchanges yesterday, the bank said that it had decided to revise the interest rates on domestic and NRE deposits for various maturity periods with effect from Monday.

The interest rates for deposits of 151-179 days and 180-269 days will be increased from 8 per cent to 8.25 per cent a year.

For deposits of 1-2 years, the interest rate would be increased from 8.75 per cent to 9 per cent and for term deposits of 500 days, the new interest rate would be 9.25 per cent instead of 9 per cent.

With respect to NRE deposits too, the interest rate is being hiked by 0.25 per cent for deposits of 1-2 years from 8.75 per cent to 9 per cent.

It was only on July 9 that Punja & Sind Bank had announced cut in interest rates by 0.25 per cent with effect from July 10 for various maturities.

But the bank then had stated that to attract medium term deposit, it would be paying 9 per cent interest for term deposits of 500 days.

For NRE term deposits, it then announced cut in interest rates by 0.25 per cent to 8.75 per cent for various maturities from 1-5 years. Both the cuts have now been rolled back.

Hike in FD rates

Already another PSU Bank Oriental Bank of Commerce (OBC) had on July 25 announced hike in fixed deposit rates by 0.25-0.75 per cent to overcome the tight liquidity.

For domestic/NRO term deposits of up to Rs 1 crore and for 91-179 days, the increase was the steepest at 0.75 per cent to 8.5 per cent from 7.75 per cent.

For deposits of 270 days to less than one year, the interest rate increase was by 0.25 per cent to 8.50 per cent from 8.25 per cent. Deposits of 180-269 days would earn 8.50 per cent interest against the existing 8 per cent.

For longer deposits from 1 year up to 10 years in different slabs, the interest rate would be 8.75 per cent. The new rates would be effective from July 25, OBC had said.

On July 15, OBC had announced a 0.25 per cent cut in interest rates on select maturities with immediate effect on deposits of Rs 5 crore and more.

Cut in base rate

After Finance Minister P. Chidambaram had urged the banks to cut the base rate early this month, there was a rush by the banks to cut the base rate. PSB also decided to cut the base rate from 10.25 per cent to 9.99 per cent with effect from August 1.

Both PSB and OBC have also decided to put on hold their earlier decision to cut the base rate apparently because the RBI’s policy review on July 30 may set the tone for the interest rate movement in the near future. While OBC was to cut it from 10.25 per cent to 10 per cent, PSB was to cut it from 10.25 per cent to 9.99 per cent.

Short-term borrowings rate

Already the country’s apex bank has raised the rates for short-term borrowings by the banks from it as part of efforts to curb liquidity in the system with a view to shore up the rupee against the greenback.

The havoc the bank stocks have suffered in the past one year could be understood from the price erosion they have suffered, including the country’s premier bank SBI that hit fresh 52 week low yesterday.

Both OBC and PSB dipped to fresh lows yesterday. OBC’s shares have fallen by more than 50 per cent — from a high of Rs 367.50 on December 10 last year to Rs 152.80 yesterday on the BSE. PSB’s shares have declined from a high of Rs 82.30 on Jan 8 this year to a low of Rs 48.80 yesterday.

Source: thehindubusinessline

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Corp Bank Q1 net shows flat growth of 2%

Corporation Bank has posted a net profit of Rs 377.98 crore during Q1 of 2013-14 fiscal against Rs 370.26 crore in the corresponding period of the previous fiscal, recording a growth of 2.08 per cent.

Net interest income (NII) during the period stood at Rs 964.74 crore (Rs 808.43 crore), recording a growth of 19.34 per cent. NII is the difference between interest earned and interest expended.

The bank’s non-interest income during the first quarter of 2013-14 fiscal stood at Rs 581.20 crore (Rs 327.61 crore), registering a growth of 77.41 per cent.

Gross non-performing assets (NPAs) stood at 2.37 per cent and net NPAs at 1.65 per cent. In absolute terms, the gross NPAs stood at Rs 2,748.79 crore and net NPAs at Rs 1,900.31 crore.

The NPA provision coverage ratio stood at 56.79 per cent with reference to gross NPA.

Commenting on Corporation Bank’s result, Vaibhav Agrawal (VP-Research, Banking) Angel Broking, said that Corporation Bank reported healthy operating performance.

“While NII grew at a healthy pace of 19 per cent, non-interest income grew strongly by 77 per cent, probably boosted by treasury gains. Overall, pre-provisioning profit for the bank grew 49 per cent. On the asset quality front, the bank witnessed significant asset quality deterioration during the quarter,” he said.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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