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Saturday, November 2, 2013

LIC Housing Finance Q2 net soars 28% on higher interest income

Aided by a healthy growth in net interest income, LIC Housing Finance reported a 28 per cent increase in net profit at Rs 310 crore in the July-September period, against Rs 243 crore in the year ago period.

However, as compared to the April-June quarter, the growth in net profit was flat.

In the reporting quarter, India’s second largest standalone housing finance company logged a 28 per cent growth in net interest income (the difference between interest earned and expended) at Rs 453 crore (Rs 354 crore in the year ago period).

Net interest margin, which is the ratio of net interest income to average earning assets, improved to 2.22 per cent in the September 30quarter from 2.10 per cent in the year ago quarter.

During the quarter, LIC Housing disbursed individual loans and developer loans aggregating Rs 5,682 crore (Rs 5,717 crore) and Rs 265 crore (Rs 121 crore), respectively.

As on September-end, the company’s outstanding mortgage loan portfolio stood at Rs 83,216 crore against Rs 69,119 crore, registering a growth of 20 per cent.

Individual loan portfolio accounts for about 97 per cent of the outstanding mortgage loan portfolio.

Gross non-performing assets increased to 0.73 per cent of the gross advances against 0.60 per cent in the year ago period.

V.K. Sharma, MD and CEO, said “For the full year, we expect the loan book to grow at around 20 per cent, with some improvement in margins.”

On Wednesday, shares of LIC Housing Finance ended at Rs 219.20 per share on the BSE, up 5.59 per cent over the previous close.

Source: thehindubusinessline
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Bank of Maharashtra Q2 profit declines 72%

Pune-based Bank of Maharashtra posted a net profit of Rs 46.85 crore during the second quarter of the current fiscal against Rs 166 crore in the same quarter of last fiscal, a decline of 72 per cent year on year.

Total income stood at Rs 3,196 crore (Rs 2,434 crore), a growth of 31 per cent year on year.

Wholesale and corporate banking operations accounted for the maximum growth in the income as well as for a loss of Rs 46 crore (gross) impacting the bottom line adversely. In the same quarter of FY 13, this segment had shown profit of Rs 39 crore.

The bank’s gross NPAs rose to Rs 2,450.48 crore from Rs 1,292.45 crore. Net NPA stood at Rs 1,535.33 crore.

Source: thehindubusinessline
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IDBI Bank net profit drops 60% on higher bad loans, provisions

Higher bad loans and provisions dragged IDBI Bank’s net profit down by 60 per cent in the second quarter to Rs 192 crore from Rs 484 crore in the year-ago period.

Gross non-performing assets (NPAs) jumped to 4.98 per cent as of September-end, 2013, from 3.45 per cent in Q2FY’13. Net NPAs also rose to 2.82 per cent from 2.04 per cent, as per the BSE filing.

Provisioning of the public sector lender soared 78 per cent to Rs 879 crore from Rs 495 crore in the corresponding quarter last year.

However, net interest income, the difference between interest earned and expended, saw a 19 per cent increase at Rs 1,484 crore against Rs 1,249 crore in the same quarter last fiscal.

During the quarter, other income declined 15 per cent to Rs 579 crore compared with Rs 683 crore in Q2FY’13.

Year-on-year advances grew 10 per cent to Rs 1.84 lakh crore (Rs 1.66 lakh crore as on September 30, 2012), while total deposits increased 12 per cent to Rs 2.03 lakh crore (Rs 1.80 lakh crore).

The shares of IDBI Bank ended down by 3.1 per cent at Rs 65.60 per share on the BSE.

Source: thehindubusinessline
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Tuesday, October 29, 2013

Monetary policy: RBI raises repo rate by 25 bps, holds cash reserve ratio

Along expected lines, the Reserve Bank of India Governor hiked the repo rate by 25 basis points in the October monetary policy review today.

The repo rate is now at 7.75 per cent. He had also raised it by 25 bps in the mid-quarter review in September.

Repo rate is the rate at which banks borrow short term funds from RBI.

Inflation has been on the upswing during the past few months. Wholesale price index (WPI) inflation touched 6.46 per cent in September while consumer price index inflation was at 9.84 per cent. Both these measures have been way beyond the comfort level of the RBI.

MSF rate cut by 25 bps

The Governor has also cut the marginal standing facility (MSF) rate by 25 bps to 8.75 per cent. The corridor between the repo rate and the MSF rate is now back to 100 bps signalling the return to normalcy in currency markets.

The MSF is an emergency window that banks borrow from when faced with a funds crunch.

Holds CRR

The RBI has kept cash reserve ratio (CRR) unchanged at 4.0 per cent of deposits and increased the liquidity provided through term repos of 7-day and 14-day tenor from 0.25 per cent of deposits of the banking system to 0.5 per cent with immediate effect.

The RBI said that with the more recent upturn of inflation, and elevated inflation expectations anticipating the pass-through of exchange rate depreciation and on going adjustment in administered fuel prices, it is important to break the spiral of rising price pressures to curb the erosion of financial savings and strengthen the foundations of growth.

Five pillars of building growth

The Reserve Bank also said that its developmental measures over the next few quarters will be built on five pillars. These are:

a. Clarifying and strengthening the monetary policy framework

b. Strengthening banking structure through new entry, branch expansion, encouraging new varieties of banks, and moving foreign banks into better regulated organisational forms.

c. Broadening and deepening financial markets and increasing their liquidity and resilience so that they can help absorb the risks entailed in financing India’s growth.

d. Expanding access to finance to small and medium enterprises, the unorganised sector, the poor, and remote and underserved areas of the country through measures to foster financial inclusion.

e.Improving the system’s ability to deal with corporate distress and financial institution distress by strengthening real and financial restructuring as well as debt recovery.

Source: thehindubusinessline
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Birla Sun Life names Pankaj Razdan as CEO/MD

Birla Sun Life Insurance (BSLI) has appointed Pankaj Razdan as Chief Executive Officer (CEO) and Managing Director (MD) of the company.

The appointment of Razdan, who has been with Aditya Birla Group since 2007, was subject to regulatory approval, the private insurer said in a release today.

“Razdan has successfully steered some of our key businesses through challenging times. He has also guided our AMC business to an industry leadership position,” Aditya Birla Group Chief Executive (Financial Services), Ajay Srinivasan said.

He replaces Jayant Dua, who will move to another role within the diversified group, the release said.

“With a strong foundation, trust of over 2.5 million customers and presence in over 550 cities, BSLI is well placed to harness the myriad opportunities that the Indian life insurance sector presents.

“I am confident that with the team, brand and infrastructure we have built over the years, we will be able to harness the opportunity the Indian insurance landscape presents,” Razdan said.

BSLI is a joint venture between India’s Aditya Birla Group and Sun Life Financial Inc, a top international financial services organisation from Canada.

Source: thehindubusinessline
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RBI has done a balancing act: City Union Bank MD

Agreeing with the Reserve Bank’s third quarter monetary policy review, Managing Director of City Union Bank, Dr N Kamakodi, said that it is the best possible solution in current scenario.

“It's a balancing act aimed at bringing inflation and liquidity under control while looking at growth. It is perhaps the best possible solution to get a balanced result in the current scenario", said Dr Kamakodi.

On the option to pay interest on savings and term deposits at shorter than quarterly intervals, he said it’s only a representation. It has nothing to do with the rates for customers.

Source: thehindubusinessline
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RBI tells banks to charge SMS alert fee as per usage

The RBI today asked banks to charge customers for transaction SMS alerts on the basis of usage, instead of imposing a fixed fee, to ensure equity and be reasonable.

“Banks are advised to leverage the technology available with them and the telecom service providers to ensure that such (SMS) charges are levied on all customers on actual usage basis,” the Reserve Bank of India said in its Second Quarter Review of Monetary Policy 2013-14.

It said fees based on actual usage are necessary to ensure reasonableness and equity in charges levied by banks.

In March 2011, the RBI had set guidelines for banks to send online alerts to customers for all types of transactions, irrespective of the amount. However, the central bank had not issued rules on charging customers for these alerts.

Earlier in the year, State Bank of India imposed an annual charge of Rs 60 for SMS alerts, a step followed by lenders such as Canara Bank.

Other PSU banks, including Punjab National Bank, State Bank of Patiala, IDBI and Vijaya Bank, have also been levying a fee for SMS alerts.

Source: thehindubusinessline
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Deutsche Bank Q3 profit tumbles following lawsuit expenses

Deutsche Bank said on Tuesday net profit dwindled to a bare 51 million euros ($70 million) in the third quarter after it set aside 1.2 billion for losses from lawsuits.

The net profit compared to a figure of 754 million euros in the same quarter a year ago. Profit for the third quarter fell far short of the average analyst estimate of 320 million euros as compiled by financial information provider FactSet.

The bank also said its investment banking business has slowed.

Net revenues fell 10 percent to 7.7 billion euros.

It said the deduction to earnings for litigation costs were mostly related to legal action over US residential mortgage-backed securities, investments based on mortgage loans to borrowers with shaky credit. The securities helped drive financial turbulence in 2007-2009 as they lost value.

The charges for the quarter raised Deutsche Bank’s set-asides for likely litigation costs to 4.1 billion euros.

Litigation charges have weighed on earnings for several quarters. During a conference call with investment analysts, Chief financial officer Stefan Krause acknowledged that the uncertainty over how big the litigation bill would eventually be was “frustrating for investors”.

Revenues at the bank’s investment banking business fell 26 per cent. The bank suffered from a slowdown in trading debt securities such as bonds. Bond markets have been volatile in recent months due to uncertainty about when the US Federal Reserve might start cutting back its bond purchase program.

The program is aimed at holding down longer term interest rates and supporting growth. Revenue from sales and trading in bonds fell to 1.29 billion euros from 2.73 billion euros.

Deutsche Bank said it was making progress in strengthening its finances and reducing its holdings of risky investments to meet new regulatory requirements, and was cutting costs, including for compensation.

Source: thehindubusinessline
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StanChart posts muted growth during Jan-Sept 2013

Standard Chartered on Tuesday said it saw a “resilient performance” in the third quarter, slowed by the Group’s performance in South Korea and Singapore.

The London-based but Asia-focused bank said its income and operating profit grew by a “low single digit” for the nine months ended September 30, 2013, compared to the same period last year.

Income for the third quarter was down by a “low single digit” percentage compared to the same period in 2012.

Operating profit for consumer banking for the first nine months of the year was down by a “mid single-digit percentage”, with its operations in Korea having a “material impact”, the group said in a statement.

Excluding Korea, the Group’s consumer banking helped grow income and profits by “high single digit percentages“.

Income for wholesale banking was flat for the first nine months of the year, compared to the same time period in 2012, with operating profit for the sector was up by a “low single digit percentage” in the same time period.

“In the third quarter, we delivered a resilient performance despite an uncertain macro environment,” group chief executive Peter Sands said in the statement.

The announcement excluded the impact of a $260 million UK bank levy, the impairment of goodwill for Korea, and a payment of $340 million in August last year to a New York regulator for violating US sanctions on Iran and other countries.

The bank had posted a goodwill impairment of $1 billion in Korea, representing a lower value of assets in the country, in August.

Standard Chartered, in the same month, said its first-half net profit fell 24 per cent to $2.13 billion, with some of its businesses in emerging Asian markets seeing slower growth.

Source: thehindubusinessline
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'Kanyasree' scheme: SBI opens over 3,000 accounts

State Bank of India has opened over 3,000 “zero balance” savings accounts under the ‘Kanyasree’ scheme of the West Bengal Government. The scheme is aimed at reducing the drop-out rates among girl students.

The scheme will provide special scholarship and grant to girl students who are continuing their study from 8th to 12th standard and pursuing higher studies.

Source: thehindubusinessline
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Rangarajan differs with RBI on inflation projection

Disagreeing with the Reserve Bank of India’s projection on the price situation, former RBI Governor and PM’s Economic Advisory Council Chairman C. Rangarajan said that the WPI inflation and the CPI inflation may not be as high as being projected by the central bank.

“Well I think the inflation rate may not be as high as (RBI) report seems to suggest. I would really think as far as WPI is concerned, it will be around 5.5 to 6 per cent. I don’t think that it will exceed 6 per cent...I expect the WPI as well as CPI to remain at slightly lower level than indicated,” Rangarajan said.

WPI, CPI inflation

The RBI, in its second quarter review of monetary policy, has said: “Overall WPI (Wholesale Price Index) inflation is expected to remain higher than current levels through most of the remaining part of the year.”

Besides, the central bank said that retail inflation measured by the Consumer Price Index (CPI) likely to remain around or even above 9 per cent in the months ahead.

Price stability

According to Rangarajan, the whole (monetary) policy has focused on price stability and that is the right approach.

“I think... as the central bank of the country, price stability is its dominate objective. Therefore the way to interpret the policy would be that it will depend very much on the behaviour of the inflation,” he said.

Further rate hike

About chances of further rate hike by RBI, he said: “...if the situation (inflation) picks up from the current level then perhaps RBI is consistent with what it said in the policy review, it has to raise it (interest rate). But I will not at this particular point, make any guess. We would like to watch inflation behaviour all the next 6 weeks.”

Rangarajan said he thinks there are prospects of inflation moderating in the next month or so because of better monsoon and the (other) impact on food inflation.

Growth projection

About the lowering of economic growth projection for this fiscal from 5.5 per cent to 5 per cent by RBI, he said: “We had estimated the growth rate to be at 5.3 per cent for the year. I don’t see any reason to alter that (projection) at present point.”

“Various reasons in the policy suggest that growth will pick up in the second half of this fiscal. Some people think that agriculture growth will be in excess of 5 per cent. Taking all these factors into account, it can be higher than 5 per cent,” he added.

Source: thehindubusinessline
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Repo rate hike on expected lines: Karnataka Bank chief

The Reserve Bank of India’s decision to increase repo rate by 25 basis points in the second quarter review of monetary policy for 2013-14 was very much expected by the market, according to P. Jayarama Bhat, Managing Director of Karnataka Bank Ltd.

Bhat told Business Line on Tuesday that to insulate the economy from fluctuation in prices, the RBI had no other option than increase the policy rates, especially when business and consumer confidence is at a low.

In the monetary policy review, the RBI has also decided to increase the liquidity provided through term repos of 7-day and 14-day tenor from 0.25 per cent of NDTL (net demand and term liabilities) of the banking system to 0.5 per cent, and also to reduce the marginal standing facility (MSF) rate by 25 basis points from 9.0 per cent to 8.75 per cent.

However, the extra liquidity given to the market by way of these two measures will bring down the interest rate in the near term, and will revert the interest rate curve to normal, he said.

Source: thehindubusinessline
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RBI’s Q2 monetary policy review: Highlights

Following are the highlights of the RBI’s second quarter review of monetary policy 2013-14:

* Repo or short-term lending rate up by 0.25 per cent to 7.75 per cent.

* Cash reserve ratio unchanged at 4 per cent.

* Marginal standing facility (MSF) rate cut by 0.25 per cent to 8.75 per cent.

* Difference between repo and MSF rate narrows to 1 per cent.

* Repo hiked due to upturn of inflation, other factors.

* Wholesale inflation expected to be higher than current levels; warrants ‘appropriate policy response’.

* Retail inflation to hover around 9 per cent.

* Food price pressures may ease with the arrival of summer crop harvest and seasonal moderation.

* Prospect of delay in taper of US Fed Reserve’s bond purchases has brought calm to financial markets.

* Normalcy will be restored in the forex market only when OMCs fully return to the market for their demand.

* FY14 GDP growth estimate revised downward to 5 per cent vs. 5.7 per cent.

* Growth likely to pick up in second half on good show in exports and agriculture.

* Liquidity pressures building on small businesses as large entities holding on payments; remedies lie in speeding-up of Government and PSU payments.

* Average drawdown from MSF has declined to Rs 0.4 trillion by mid-Oct, down from a high of Rs 1.4 trillion in mid-Sep

* Final guidelines on unhedged forex exposures by corporates to be out by December

* Jalan panel on new bank licenses to hold first meet on Nov 1, decision of RBI on in-principle approvals will be final.

Source: thehindubusinessline
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Not considering change in ownership structure: Federal Bank

Kerala-based private lender Federal Bank, which recently received the Foreign Investment Promotion Board’s nod to raise foreign holding to 74 per cent, on Monday said it is not seeking any change in the ownership structure.

“We would like to clarify that we have not sought any change in the already existing limit of foreign investment or (even in the existing sub-limits for FIIs up to 49 per cent and NRIs holding up to 24 per cent) in the equity share capital of the bank,” Shyam Srinivasan, Managing Director and CEO, said at a press meet here.

This limit is exactly what was approved by the shareholders’ resolution on February 23, 2006 and the Reserve Bank of India on March 22 that year, he said.

“Our focus area remains organic growth and we are not in any way considering any change in the ownership structure of the bank.”The consolidated FDI policy issued by the Department of Industrial Policy and Promotion on April 5, 2013 stipulated that specific government approval should be obtained for foreign holdings above 49 per cent and up to 74 per cent in private sector banks.

In the light of this policy announcement, Srinivasan said, the RBI had mandated the Federal Bank to seek approval from the FIPB for continuing with its prevailing foreign holding limit. The FIPB approval was, therefore, required to maintain the status quo, he added.

The cap on individual shareholding of 4.99 per cent will remain intact and no shareholder -- domestic investor, FII or NRI -- will be able to acquire stakes in the bank beyond 4.99 per cent without obtaining the approval of the Board of Directors and thereafter of the regulators, Srinivasan said.

“While reports confirm that the FIPB has approved the bank’s application, we are yet to receive the formal communication of the approval,” he added.

Source: thehindubusinessline
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Corporation Bank vigilance awareness week

Corporation Bank is observing vigilance awareness week from Monday.

A press statement by the bank said here on Monday that the vigilance awareness week commenced at the corporate office of the bank by administering the pledge to all the employees, including the senior officials of the bank, by S.R. Bansal, Chairman and Managing Director of the bank, in the presence of Amar Lal Daultani and B.K. Srivastav, Executive Directors of the bank.

K.S. Somayaji, General Manager and Chief Vigilance Officer, read out the messages received from the President and other dignitaries, the statement said.

Source: thehindubusinessline
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Sunday, October 27, 2013

ICICI Bank: Strong loan growth aids profitability

Yet another private sector bank has performed well in the September quarter, despite rising costs and deteriorating asset quality. ICICI Bank improved its net interest margin and posted strong loan growth, that was a tad better than some of its peers.

The bank’s strategy to focus on retail lending continues to pay off. Retail loan-book growth of 20 per cent helped the bank inch past HDFC Bank’s 17 per cent growth during the quarter. The loan quality has also been healthy.

Within the retail space, secured home and auto loans have grown 23 per cent and 27 per cent, respectively. However, it lagged peers in the SME (small and medium enterprises) segment.

While HDFC Bank and Axis Bank grew their SME loans by 20 and 29 per cent, respectively, ICICI Bank’s growth in this segment was flat.

In spite of volatile interest rates, the bank was able to maintain its net interest margin (NIM), as its dependence on wholesale funding is low. Over the last three years, the bank has been able to significantly ramp up its low cost CASA (current account savings account) ratio, from 29 per cent in 2008-09 to 43.3 per cent towards the end of the September quarter.

The healthy deposit mix saw the bank achieve its first ever full year NIM of 3 per cent in 2012-13, which improved further to 3.3 per cent in the September quarter. In fact, the bank managed to marginally raise its NIM, even as its peers faced some margin pressure due to the rise in cost of funds.

Most private sector banks have dealt well with the problem of rising bad loans. ICICI Bank has also maintained its slippages within guided levels. A small negative has been the lower provisioning coverage and the marginal rise in restructured loans.

While the RBI had allowed banks to apportion their mark-to-market losses on their bond portfolio over three quarters, most private sector banks have turned down the offer.

ICICI Bank joined its peers in booking the entire loss in the September quarter itself, and still delivered 20 per cent growth in net profit.

Source: thehindubusinessline
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Birla Sun Life Insurance launches life insurance plan

Private insurer Birla Sun Life Insurance launched a life insurance plan called the Vision LifeSecure Plan which offers a combination of regular bonuses throughout the policy term and a life insurance benefit until the age of 100.

“The overall life expectancy across age groups has grown, with the average longevity per person improving. With benefits payable on maturity and a life cover beyond the term of the policy up to 100 years of age, Vision LifeSecure Plan offers a combination of savings and comprehensive financial protection to you and your family,” Birla Sun Life Insurance Managing Director and CEO, Jayant Dua said in a release.

Vision LifeSecure Plan offers maturity and death benefits, including regular accrued bonuses and terminal bonus, if any, besides providing the flexibility to choose the sum assured and the policy term, at inception.

In the event the insured person survives until the end of the policy term, a maturity benefit is payable to the policyholder.

The cover will continue till the insured person attains 100 years of age. In case of death during this period, or survival until 100 years (whichever is first), a guaranteed death benefit is payable.

The policy also offers a simple revisionary bonus at the end of each financial year during the policy term, which would be added to the policy on its anniversary.

The company may also pay a terminal bonus on maturity or death, if earlier, based on actual experience and prevailing economic conditions.

Birla Sun Life Insurance is a joint venture between the Aditya Birla Group and Sun Life Financial Inc, one of the leading international financial services organisations in Canada.

Source: thehindubusinessline
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IOB net drops 16% as treasury income skids

Indian Overseas Bank saw its net profit drop 16 per cent to Rs 132 crore in the second quarter ended September 30, from Rs 158 crore in the comparable previous-year quarter. Total income during the quarter rose a little over 8 per cent to Rs 6,000 crore, from Rs 5,515 crore in the year-ago period.

M. Narendra, Chairman and Managing Director of the bank, attributed the drop in profits to the Rs 400-crore loss of treasury income ( due to the volatile rupee) and Rs 96-crore loss on transfer of SLR securities worth Rs 4,711 crore from AFS (available-for-sale) category to HTM (held-to-maturity) category.

The bank reported gross NPAs (non-performing assets) of Rs 8,201 crore (4.65 per cent) at the end of the quarter against Rs 5,930 crore (2.25 per cent) last year. Net NPAs too, rose to Rs 4,875 crore (Rs 3,378 crore in the previous year).

Despite the slowing economy, the bank saw loan slippages drop 37 per cent to Rs 1,167 crore. Restructured accounts too, came down to 9.74 per cent (Rs 17,174 crore) from 11 per cent (Rs 18,356 crore) in the previous quarter.

On the recovery front, IOB managed cash recoveries of Rs 222.63 crore against Rs 198.58 crore in the same period last year.

Provision-coverage ratio as on end-September stood at 59.34 per cent. Net interest margin improved to 2.31 per cent from 2.24 per cent. Book value per share has come down to Rs 120.48 from Rs 125.79 in the same period last year.

Source: thehindubusinessline
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