CUB, which has a strong regional presence in South India, has been able to maintain its return on asset at 1.45 per cent, which is higher than most of its peers. Steady asset quality and control over operating expenses led to a 19 per cent growth in net profit during the March quarter.
However, the bank’s high-yielding MSME portfolio, which contributes about a third of the bank’s loans, continued to show healthy traction. This segment grew 25 per cent year-on-year in the March quarter.
Wholesale traders segment, which is again high yielding, grew 23 per cent.
Net interest margin, net interest income
The bank has also been able to sustain its net interest margin (NIM) in the range of 3.3-3.5 per cent range through the year. However, weak loan growth has resulted in muted growth in net interest income (NII).
During the March quarter, NII grew 11 per cent over the previous year. Strong growth in treasury income and a modest 4 per cent growth in operating expense drove a healthy growth in net profit.
The bank is also well capitalised for growth, with Tier 1 capital ratio at 16 per cent as of March 31, 2015.
Source : Thehindubusinessline