BANGALORE, June 9: Even as there is a dip in gross and net profits of Vysya Bank Ltd for the year ending March 1997, the board of directors have recommended a higher dividend of 60 %, subject to Reserve Bank's clearance.Gross profit is down by Rs 8.66 crore at Rs 118.83 crore and net profit by Rs 35 crore at Rs 65.12 crore. The dividend has been hiked from 55 % to 60 %. However, the total income of the bank rose to Rs 740.55 crore, recording an increase of 10.79 %.The bank officials stated that the margins were under pressure primarily due to high cost of funds in the industry and the impact of competitive pressures. ``The dividend will be much less for last year, when tax deduction is taken into account. This year, it is free of tax in the hands of shareholders and we have envisaged to reach a position of over Rs 6,000 crore in deposits,'' they added.According to a bank release, the non-fund income of the bank did not keep pace with the consistently high pace of growth that the bank had maintained, due to a slowdown in imports, the sluggishness in the capital market, the poor credit off-take and the general economic slow down.During the year under review, the deposits of the bank stood at Rs 5,089 crore and average advances at Rs 2,516 crore. Of this, priority sector advances amounted to Rs 1,083 crore. The capital adequacy ratio of the bank was 14.21 %. Book value was pegged at Rs 434.78 and earnings per share was Rs 59.75, based on the weighted average capital.The bank has shored up its reserves by Rs 96.46 crore to Rs 458.75 crore, indicating a growth of 26.62 %. ``The networth at Rs 473.39 crore is said to be the highest amongst the private sector banks.''``Further after marking to market 60 % of its investments portfolio and providing for loan delinquencies, the Bank has posted a net profit before tax of Rs 73.67 crore. The bank, which was hitherto a zero-tax company had to charge Rs 8.55 crore towards MAT and accordingly after all deductions, the net profit is at Rs 65.12 crore,'' the release added.Despite dismal performance, the bank officials said VBL has achieved a robust growth of 18 % in deposits as against the industry average of 16 % and the accretion for the period was Rs 768 crore. The core deposits, which constitutes 86 % of the total deposits, registered a higher growth of 39 % including a stable resource base. However, the cost of deposits at 11.16 % has had its impact on the profits.The trading turnover from the forex business for the bank was Rs 15,560 crore. At the same time, the average yield from Gilts market moved up from 12.65 % to 13.31 %.
