IDBI Bank plans to raise Rs 555 cr via preferential issue to Govt

IDBI Bank Ltd is planning to raise Rs 555 crore through preferential issue of equity capital to the Government, the bank said in a notice to the BSE. The public sector bank is also planning to raise up to Rs 2,500 crore via the qualified institutional placement route. Both the capital raising programmes, which will shore up its core capital, are subject to approval from shareholders and other statutory/regulatory approvals, if any, the bank said.

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Growing demand for home loans lifts HDFC net 16% in Q3

India’s largest housing finance company, Housing Development Finance Corporation’s third quarter net profit grew 16 per cent on a standalone basis boosted by strong demand for home loans from individual customers.

In the October-December quarter, HDFC’s net profit grew to Rs 1,140 crore from Rs 981 crore, a year ago.

“The growth in profit was because of strong loan book growth in the individual category of buyers across the country,” Keki Mistry, Vice-Chairman and CEO, said.

The higher profit during the quarter indicates a growing demand for home loans in India’s tier-II and tier-III cities and higher value of each loan size. HDFC’s average loan size is Rs 21.50 lakh compared with State Bank of India’s Rs 12 lakh. SBI is the country’s largest home loan lender.

Year-on-year, HDFC’s loan book grew 22 per cent to Rs 1,60,434 crore. In the quarter ended September 2012, the housing finance major’s loan book stood at Rs 1,55,128 crore.

Total income in the period ended December 2012 grew 17 per cent to Rs 5,242 crore (Rs 4,467 crore, a year ago).

Expenditure increased 18 per cent to Rs 3,705 crore (Rs 3,144 crore, a year ago).

Gross non-performing loans in December-end narrowed to 0.75 per cent (Rs 1,224 crore) of the loan portfolio compared with 0.82 per cent in the year-ago period, the company said in a statement. In the same period, HDFC provided Rs 1,783 crore to cover bad loans, Mistry said.

INTEREST RATES

Mistry said that if the Reserve Bank of India cuts policy rates in the current quarter, then housing finance companies may pass on the interest rate cuts, at least partially, to customers.

He said there is expectation that the RBI might cut policy rates by 25 basis points in the January policy review and by another 25 basis points in the March review.

Shares of Mumbai-based HDFC, closed at Rs 814.50, down 0.95 per cent on the Bombay Stock Exchange. The benchmark Sensex ended up 0.31 per cent at 20101.82 points.

satyanarayan.iyer@thehindu.co.in

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Federal Bank launches `Federal Manipal School of Banking'

Private sector lender, Federal Bank launched the Federal Manipal School of Banking at the Manipal University Bangalore Campus to provide student training on various areas of banking and management.

The Federal Manipal School of Banking will offer full-time programme for one year that includes nine months of campus training and three-month internship at a branch of Federal Bank, which will be coupled with grooming and soft skills training, the bank said in a statement.

Students will earn a monthly stipend of Rs 2,500 for the first 9 months and Rs10, 000 per month during their three month internship with the bank. Federal Bank will support full fee financing through education loans and loyalty bonuses, the statement added.

A post graduate diploma in banking and finance will be awarded by Manipal University to students at the end of the course and will be absorbed as probationary officers by the bank.

Abraham Chacko, Executive Director, Federal Bank said “This programme is aimed at providing the officers with that extra mile of knowledge and skills which will in turn aid to their excellence in banking and services.”

Beena.parmar@thehindu.co.in

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IndusInd Bank eyeing Rs 1,000-cr credit card biz

IndusInd Bank aims to touch Rs 1,000 crore in its credit card business by March 2014, according to Romesh Sobti, Managing Director and Chief Executive Officer, IndusInd Bank. That would be two per cent of their loan book then. At present the credit card portfolio is about Rs 380 crore.

Sobti said that the business is very profitable as it generates lot of ‘other income’ in the form of fees, foreign exchange business, transactions or issuance fees, etc. “Ours is a transaction-based model so spenders make the money for us...,” he said.

Deutsche Bank buy

IndusInd Bank had bought Deutsche Bank’s credit card business in 2011 for around Rs 224 crore. The bank’s active customer base during the acquisition was around 1.35 lakh.

“This base has grown, though not dramatically, but we have tried to deepen the existing relationship with customers. Currently, we issue about 4,000-5,000 cards every month.” Sobti said.

The acquisition has worked very well for the bank. “It has surprised us. We tried to rationalise a little bit on the cost structure and some rationalisation on the vendors’ side, so there was a cost reduction initially. But we gave stronger propositions to the card holders and there has been almost nil attrition,” Sobti said.

He added, “We see a profit before tax of about 50-60 crore this year. It was a small purchase, easily digested and profitable.”

On recovery mode

The credit card industry went through a difficult phase during the last four years when volumes shrank from 28 million cards to about 17 million about a year ago. It has just begun recovering in the last year and today volumes are around 18.3 million cards. Better underwriting standards, evolution of credit information bureaux such as CIBIL and greater compliance have improved the profitability for many players.

Sobti said, “Credit cards will be very profitable for the banks over the next five years as plastic money is proliferating. People even buy two-wheelers through a credit card and there is more compliance on the tax-side and more surveillance on the credit-card side.”

beena.parmar@thehindu.co.in

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Mundra is new CMD of Bank of Baroda

The Centre has appointed S. S. Mundra as Chairman and Managing Director of Bank of Baroda.

The appointment came nearly two months after M. D. Mallya, erstwhile Chairman and Managing Director had superannuated.

Prior to this, Mundra was Executive Director at Union Bank of India. His tenure as Chairman and Managing Director of BOB is till July 31, 2014.

Union Bank ED

The Centre has also appointed K. Subrahmanyam as Executive Director of Union Bank of India to fill up the vacancy due to Mundra’s elevation.

Subrahmanyam is currently General Manager, Indian Overseas Bank, and is due to superannuate in end-July 2015.

Srivats.kr@thehindu.co.in

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