Financial Daily from THE HINDU group of publications
Friday, May 24, 2002
Money & Banking
Public Sector Banks
Corporate Results - Public Sector Banks
Indian Bank posts net profit after six years
CHENNAI, May 23
INDIAN Bank has reported a net profit of Rs 33.22 crore for 2001-02 - the bank's first net profit in six years. Last year, the Indian Bank had made a net loss of Rs 274 crore.
For 2001-02, the bank's operating profit also grew to Rs 307.15 crore, as against Rs 61.59 crore for the previous year. Answering a question at a press conference here on Thursday, the bank's Chairperson and Managing Director, Ms Ranjana Kumar, said that a little over Rs 200 crore of this, came from the bank's treasury operations.
She said that the surge in profits from treasury operations was keeping in line with the trend in the entire banking industry. It also implies that the Indian Bank has a "very vibrant treasury department", she said.
With the Rs 1,300-crore of recapitalisation the bank received from the Government in the last days of 2001-02, the bank's networth has turned positive and stood at Rs 356 crore on March 31, 2002.
But the bank's capital adequacy ratio still stands at less than two per cent (of advances).
Ms Kumar said that the bank expected another Rs 770 crore of recapitalisation funds from the Government this year.
With the net profit made last year, the bank's accumulated losses stood reduced at Rs 3,849.62 crore as at March 31, 2002.
In reply to a question, Ms Kumar said that the bank earned interest of around Rs 200 crore, (which is totally cost free) on the `recapitalisation bonds' issued by the Government. (For the current year, this interest would be higher, because the bank would receive interest for the full year, on the Rs 1,300 crore of recapitalisation bonds issued in March 2002.)
Indian Bank's gross domestic NPA slid to 16.90 per cent from 21.72 per cent in the previous year. Net NPAs also declined to 8.54 per cent, from 10.84 per cent. As much as 50.53 per cent of NPAs are covered by provisions.
Aggregate domestic deposits grew 12.18 per cent (by Rs 2,460 crore) to Rs 22,659 crore. Total global deposits (including the two overseas branches) grew 10.81 per cent (by Rs 2,346 crore) to Rs 24,039 crore.
The average cost of deposits declined to 7.63 per cent (7.91 per cent earlier). Average cost of funds was 7.11 per cent, same as in the previous year.
Gross domestic credit increased 11.22 per cent (by Rs 1,047 crore) to Rs 10,379 crore. Global credit stood at Rs 10,908 crore.
Average return on advances increased to 10.64 per cent from 10.26 per cent, earlier.
The average spread, or the difference between the average cost of funds and the average return from advances, therefore works out to 3.53 per cent.
In the four-year period between 1997-98 and 2000-01, the Indian Bank had the highest growth in interest spread, among all public sector banks. The bank achieved a 340 per cent increase in interest spread, from Rs 111 crore to Rs 489 crore - a performance bettered only by the ICICI Bank (453 per cent increase) and the HDFC Bank (393 per cent). But then, for these two banks, the increase was on a much smaller base.
During the same period, the interest spreads of the PSU banks as a whole grew from Rs 18,902 crore to Rs 29,291 crore, or by 55 per cent.
No more recap, says Minister
THE Union Minister of State for Finance, Mr Balasaheb Vikhe Patil, on Thursday ruled out any further recapitalisation support to bank, from the Government.
Answering questions at a press conference here on Thursday, Mr Patil said that the banks would have to fend for themselves.
Later, at another press conference of the Indian Bank, the Chairperson and Managing Director, Ms Ranjana Kumar, said, "no comments", when the Minister's statement was brought to her attention. The Indian Bank has just been given recapitalisation support of Rs 1,300 crore, and the bank is expecting another Rs 770 crore this year.
However, speaking in a different context, Ms Kumar hinted at the possibility of a public issue. Pressed for details, she said it would be "unwise" of her to talk about it now.
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