The Hindu Business Line : Syndicate Bank net falls on higher tax liabilities

Briefing newspersons here on Tuesday, the Syndicate Bank's Chairman and Managing Director, Mr Michael Bastin, said that the bank needed this capital in view of the expanding business and rising credit growth.

The bank, he said, had posted a net profit of Rs 89 crore for the third quarter of the current financial year, down from the second quarter's figure of Rs 114.60 crore. The drop was partly due to the high tax liability on the bank for the third quarter. The bank incurred a tax liability of Rs 61.16 crore.

Mr Bastin said that the tax liability was incurred since it had wiped out all its losses. Consequently, its tax liability had also increased.

But the bank's Q3 operating profit also dropped to Rs 219.53 crore as opposed to Rs 271.07 crore during the second quarter. The fall was partly due to the increased gross expenditure. For Q3, the total expenditure was Rs 724.69 as against Rs 646.37 crore. The increase was driven by the escalating interest expenditure during the period. The interest expenditure for the periods was Rs 437.16 crore as against Rs 344.49 crore during the period.

The drop in profits was also due to the fall in investment income during the period. Interest on investments for Q3 was Rs 338.40 as against Rs 347.10 in Q2.

In Q3 for the last financial year, the operating profit was Rs 127.33.

For the first nine-month period basis, the net profit for the current year was Rs 305 crore as against Rs 244 crore of the corresponding period of last year.

But the bank has managed to prune operating expenditure during the period. Operating expenditure was Rs 287.53 crore in Q3 as against Rs 301.88 crore in Q2.

Mr Bastin said the bank intended to further prune expenditure during the coming months. From February this year, the bank would be offering special leave to its employees for a period of anywhere between two to four years.

During this period, the employees would be paid 25 per cent of their gross. These employees would also be expected to market some of the life and general insurance products, which the bank was offering through its branches.

These scheme was expected to be taken up at least 2,000 employees of the bank. The scheme would result in a saving of a minimum of Rs 50 crore per year.

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