State-run Corporation Bank today reported an almost flat growth in its net profit for the March quarter at Rs 351.3 crore,driven down by a sharp spike in non-performing assets.
The Mangalore-headquartered bank’s post-tax profit for the same period last year was Rs 345.34 crore.
The net non-performing assets ratio as a percentage of total advances almost doubled to 0.87 percent(Rs 869.38 crore) from 0.46 percent (Rs 397.74 crore) a year ago.
Total provisions went up over 20 per cent to Rs 463 crore in the quarter,largely driven by a sharp jump in loan restructuring by the state-run Air India and three state electricity utilities from Rajasthan,which together accounted for Rs 2,500 crore.
Bank’s Chairman and Managing Director Ajai Kumar said the net profit is flat as a result of the difficult market conditions because of the lull in economic activity and due to the bank’s conscious strategy of keeping away from the big-ticket loans which squeeze margins.
Kumar,however,said there are no negative surprises in store on the asset quality front and said he expects FY13 to be normal year.
The core net interest income was up by 9.47 percent at Rs 833.92 crore while the non-interest income was up by 18.85 percent to Rs 1,492 crore during the fiscal.
Tne net interest margin for the quarter came down to 2.41 percent from 2.77 percent in the year ago period as it was unable to pass on the jump in cost of funds to borrowers.
A major factor contributing to the fall was the decrease in the share of the low-cost current and savings accounts deposits to 22.12 percent,down from 25.9 percent a year ago.
Kumar said the bank will be focusing on increasing the share of Casa deposits during the fiscal and is targeting a NIM of 2.8 to 2.9 percent by fiscal end as the rates are coming down.
During the fiscal,the bank registered a 16.61 percent jump in deposits and 15.68 percent in advances,while Kumar said it is targeting a 20 percent jump in both the numbers during the ongoing FY13.
The flat results made the bank scrip lose 3.70 percent to close at Rs 385.30 a piece on the BSE,whose 30-share Sensex shed 1.87 percent.
Kumar said the bank will add up to 500 branches to its network of 1,500 branches during the fiscal,to increase the Casa share,with a special focus on rural ones.
It also plans to open branches or offices at Hong Kong and Dubai in the immediate future and has charted long-term plans of having a presence in Kenya,Zamibia and Malaysia,he said.