Saraswat Bank FY11 net up 78% at Rs 212 cr

Country's biggest lender from the co-operative space, Saraswat Bank, has posted a 78% growth in net profit at Rs 212.27-crore in FY11 on the back of a lower base but said RBI's rate tightening will result in margins getting dented by up to 80 basis points this fiscal.

"Our profitability will be hit because of the rate hikes by the Reserve Bank...As we are in co-operative sector, we have no immediate plans of passing the hike on to our borrowers," the bank's Chairman Eknath Thakur told reporters here today.

The bank's net interest margins stood at 3.52% and Thakur expects it to come down to 2.80%. Currently, bank's base rate is 10%, he said.

Commenting on the performance in FY11, Thakur said the net profit increase is high because of a lower base in the previous fiscal when the bank took a hit because of the global slowdown and its exposure to the diamond trade.

Saraswat, which has amalgamated seven banks into itself till now, is in advanced talks to takeover a Karnataka-based co-operative in a weak financial state. An MoU will be signed soon and the target bank has 39 branches, Thakur said, choosing not to divulge the name of the bank.

The 93-year-old bank's capital adequacy stood at 12.7% and Thakur said its proposal to expand the capital by issuing shares to borrowers at book value is in advanced stages of being given the go-ahead through a change in statutes.

Such a permission will help it tide over problems relating to capital raising in its growth plan.

"Being a co-operative, we cannot issue shares and list on the markets. We have to think of newer ways," Thakur said, reiterating that turning itself into a private entity is also on the bank's radar which will take care of the capital issue.

However, he did not give any timeframe for the same.

The bank's total business stood at Rs 27,313-crore as on March 31, 2011 and it is targeting Rs 1-lakh-crore in the next 10 years.

Saraswat has also written to the Reserve Bank seeking to start asset reconstruction, microfinance and marketing subsidiaries, Thakur said.

For the asset reconstruction business, it has already sounded some peers in the co-operative space and a state-run lender "informally" with a proposal to team-up as per the regulatory requirement for the business.

On its own asset quality, the gross non-performing assets ratio improved to 3.25% and Thakur attributed the high prevalence of stressed assets to the NPAs coming from the merged banks.

For FY12, the bank is targeting a 25% growth in both advances and deposits as against FY11's 24.45% and 10.75%, respectively, Thakur said, adding, he plans to add over 90 branches during the year.

Source: Business Standard

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Punjab & Sind Bank to raise Rs 600 crore in 2011-12

New Delhi: State-owned Punjab & Sind Bank (PSB) plans to raise Rs 600 crore during the current fiscal from bonds to fund business growth.

"The board has given approval to raise Rs 600 crore from Tier-II bonds in 2011-12," said Punjab & Sind Bank Executive Director P K Anand.

It would be raised in phased manner depending on the requirement, he said. The bank expects to clock 28 per cent increase in advances, while deposits are likely to grow at 30 per cent in the current fiscal, he said.

During 2010-2011, deposits rose by 21.5 per cent to Rs 59,723 crore, while advances jumped 30.8 per cent to Rs 42,833 crore. Thus, the total business of the bank crossed Rs 1,02,555 crore at end of March, 2011.

It is to be noted that the bank, last among the public sector lenders to be listed, raised funds through initial public offering (IPO) an year ago. The bank raised Rs 470.82 crore through IPO, which was subscribed 50.75 times.

For the entire fiscal ended March 31, 2011, the net profit of the bank rose marginally by 3.5 per cent to Rs 526.1 crore from Rs 508.8 crore recorded in the previous fiscal.

Total income improved to Rs 5,369.5 crore from from Rs 4,345.9 crore in 2009-10. The net interest income of the bank rose by 31 per cent to Rs 1,560 crore in 2010-11 against Rs 1,184 crore in the previous fiscal.

The net interest margin (NIM) improved to 2.66 per cent at the end of fourth quarter compared to 2.45 per cent at the end of March, 2010.

Anand said the bank would aim to further improve it to 3 per cent in 2011-12.

Source: Financial Express

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State Bank of Travancore raises lending rate by 50 bps

Mumbai: Two banks including State Bank of Travancore (SBT) on Saturday raised lending rates by 50 basis points which will make auto, home and other loans from the lender costlier to existing as well as new borrowers.

The revised base rate or the minimum lending rate will be 9.50 per cent from May 9, up from 9 per cent now, SBT said in a filing to the Bombay Stock Exchange.

The rate hike comes within days of the Reserve Bank hiking its policy rates by 50 basis points, making cost of funds dearer for commercial banks.

The bank has also announced increase in its benchmark prime lending rate (BPLR) by 50 basis points to 14.25 per cent.

Besides, private sector Development Credit Bank raised its both its base rate and BPLR by 50 basis points.

The higher lending rates would make loans dearer for both new and existing auto, home and corporate borrowers.

Yesterday, ICICI Bank and five public sector banks raised their lending rates by up to 50 basis points.

Banks have been on a rate hike spree since the Reserve Bank's decision to raise short-term key rates including the repo and reverse repo by 50 basis points in its Annual Credit Policy on May 3.

The repo rate and reverse repo rate now stand at 7.25 and 6.25 basis points, respectively.

Besides, the banking regulator also upped the savings bank deposit interest rate to 4 per cent from 3.5 per cent.

Source: Financial Express

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Nadan Nilekani buys into Dhanlaxmi Bank

New Delhi: Nandan Nilekani, Infosys' co-founder and chairman of Unique Identification Authority of India (UIADI), has acquired over one per cent in private sector lender Dhanlaxmi Bank.

He took over the reins of UIADI in 2009 and had resigned as the CEO of the country's largest software exporter Infosys in 2007.

According to the information available with Bombay Stock Exchange, Nilekani holds 9,93,827 shares in the bank which translates into 1.17 per cent stake as on March 31, 2011.

Dhanlaxmi Bank is among the banks in the country which does not have any domestic or foreign promoters.

Apart from Nilekani, there are 22 shareholders which hold stakes between 1 and 7 per cent in the Kerala-based bank.

Nilekani and his family, which currently holds 3.44 per cent stake in Infosys, is the second largest promoter in the software firm after the company's mentor N R Narayana Murthy and his family.

Nilekani served as the CEO of the company from 2002 to 2007, when he relinquished his position to his colleague Kris Gopalakrishnan, becoming Co-Chairman. He left Infosys in 2009 to serve as the chairperson of the UIADI, in the rank of a cabinet minister under invitation from the Prime Minister Manmohan Singh.

Source: Financial Express

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Central Bank of India mulling entry in Asian, African markets

MUMBAI: With a view to develop a global footprint, state-run Central Bank of India is mulling an entry into markets such as Bhutan, Mozambique, Hong Kong and Kenya this year by adopting multiple routes.

"We have applied to the Reserve Bank to have a representative office in Nairobi and enter Mozambique and Bhutan by forging joint ventures with local partners," the bank's Chairman and Managing Director, S Sridhar, told a select group of mediapersons here.

Besides this, the Mumbai-headquartered lender, which completed its centenary recently, has also sought a regulatory go-ahead to have a full-fledged branch in Hong Kong, which will be helpful in raising foreign funds, Sridhar said.

At present, the mid-size Government lender does not have an international presence except the Indo-Zambia Bank in which it has a stake along with other PSB peers Bank of India and Bank of Baroda .

In Bhutan and Mozambique, local regulations require the bank to have a tie-up, he said

"In Bhutan, there is a lot of money floating beyond (the capital) Thimpu. Plus, with a system like the Unique Identity project of India already in place, the KYC (know your customer) gets easy and accounts can be opened fast."

As for Mozambique, Sridhar said the greater interest shown by Indian corporates in the African continent is prompting the bank to have a look at having a presence in the south-east African country.

"Also, I have found the people of Mozambique have a lot of respect for Indians. They look at Indians as honest people and there have been instances of them turning to us for advice. These factors will help the bank," he said.

Source: EconomicTimes

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