Public lender Corporation Bank today reported near flat growth in net profit of 5.41 per cent in the first quarter ended June 30 at Rs 370.3 crore on a massive spike in provisions which soared to 258 per cent to Rs 240 crore,offsetting a healthy growth in advances.
Net interest income went up by 14.34 per cent to Rs 808.4 crore from Rs 707 crore during the period,the bank’ Chairman and Managing Director,Ajai Kumar,told reporters here.
The Karnataka-based lender’s gross non-performing assets (NPAs) rose to 1.71 per cent at Rs 1689.42 crore,while net NPAs moved up to 1.2 per cent from 0.52 per cent to Rs 1185.48 crore during the same period.
Due to an increase in the cost of funds – from 6.71 to 7.41 per cent – the bank saw its net interest margin (NIM) slipping to 2.29 per cent from 2.75 percent.
During the quarter,the bank saw its deposits,89 per cent of them bulk,grow 13.86 per cent to Rs 1,34,103 crore,while total advances grew 25 per cent to Rs 98,546 crore,taking its credit-deposit ratio to 73.5 per cent.
Asked whether the bank will be able to meet the Finance Ministry directive of bringing down its high ratio of bulk deposits to 15 per cent by next March,Kumar said,”I don’t think so and I will have to ask for some concessions.”
During the June quarter,total income rose 22.60 per cent to Rs 3,978.2 crore,net interest income increased 22.57 per cent to Rs 3650.62 crore and the key net interest income (NII) was up 14.26 per cent to Rs 707.56 crore. Non-NII shot up 23 per cent to Rs 266.47 crore.
On the rise in NPAs,Kumar said the bad loan portfolio rose because of a few big accounts.
“Otherwise,we have kept them under control. There were three or four big accounts. Because of them,gross NPLs increased by Rs 415 crore. But we have put in strong recovery up-grade as well as monitoring systems. I am sure I would be able to keep it under control. There would not be any high increase in times to come.”
The bank made higher provisions to the tune of Rs 266 crore to have a better provision coverage ratio.
During the period under review,the Government lender saw its retail credit rising 33 per cent,led by a healthy 24 per cent growth in SME advances.
Total priority sector lending rose 22 per cent during the period.
Like its other peers,the 107-year-old state lender saw its CDR (corporate debt restructuring) book jumping massively,thanks to some state electricity boards (SEBs),which are in dire straits.
Of its total revamped loan book of Rs 1,075 crore,over Rs 900 crore came from SEBs.