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Tuesday, Aug 10, 2004

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Money & Banking - Private Banks


GTB full year net loss widens to Rs 812 cr

Our Bureau

Hyderabad , Aug. 9

DESPITE additional recoveries of Rs 323 crore from non-performing assets (NPAs) and written-off accounts during the last fiscal year, Global Trust Bank (GTB) has suffered a huge net loss of Rs 812.38 crore.

It had incurred a net loss of Rs 272.7 crore in the previous fiscal.

Stating that the accounts were drawn up on a `conservative basis' in view of the proposed amalgamation with Oriental Bank of Commerce (OBC), the Managing Director of GTB, Mr Sudhakar Gande, told Business Line that the loss for the fiscal under review was mainly on account of provisioning of about Rs 535 crore that was necessitated largely by aging and weakening of security of earlier NPAs, operating loss of Rs 79 crore and about Rs 164 crore towards accelerated and prudent provisioning on select items including non-banking assets and Rs 35 crore towards other provisioning.

The bank has prepared its accounts on a `going concern basis' in view of the proposed merger with OBC. According to the bank, its total accumulated losses as on March 31, 2004 exceeded its capital and reserves by Rs 810.18 crore.

"The bank has made accelerated provision of Rs 92 crore towards impairment in the value of certain non-banking assets based on independent valuations as a prudent measure as at March 31, 2004, although the Accounting Standard 28 requiring provision towards impairment of assets is mandatory with effect from April 1, 2004," Mr Gande said.

The bank has also made a provision of Rs 52 crore towards diminution in the value of an investment permitted to be classified under `held to maturity' category by the Reserve Bank of India, though the diminution was not required to be provided, Mr Gande said. Further, the bank has made a floating provision of Rs 20 crore as a measure of prudence.

According to Mr Gande, the bank disputed the demands raised by the Income Tax Department against which appeals were filed and they were under different stages of disposal. The bank made provision to the extent advised by the tax consultants. In light of the proposed amalgamation of the bank with OBC under the provisions of the Banking Regulation Act and also as a prudent measure, no adjustments to deferred tax asset were made for the year, he said.

For the fiscal under review, the bank registered interest earnings of Rs 354.19 crore compared with Rs 539.59 crore in the previous fiscal and other income of Rs 161.06 crore (Rs 191.36 crore), taking the total income to Rs 515.25 crore (Rs 730.95 crore).

The bank has provided Rs 435.13 crore towards interest expenditure (Rs 517.41 crore) and Rs 158.91 crore towards operating expenses (Rs 177.1 crore), taking the total expenditure to Rs 594.04 crore (Rs 694.51 crore), which resulted in the bank suffering an operating loss of Rs 78.79 crore compared with an operating profit of Rs 36.44 crore posted in the previous fiscal.

Further, the provisions and contingencies amounted to Rs 708.19 crore (Rs 309.09 crore) and provision towards taxation stood at Rs 25.4 crore (Rs 50,000 ), leading to the bank incurring a net loss of Rs 812.38 crore (Rs 272.7 crore).

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