Corporation Bank sees rise in profit from treasury ops in Q1

Public sector lender Corporation Bank is eyeing a significant rise in profit from the treasury operations in the first quarter of the current fiscal on fall in bond yields.

"Trading profits will be significantly higher in the first quarter on the back of fall in bond yields," a bank official told PTI.

Trading profit is likely to be higher both on sequential and year-on-year basis, he said, adding this may be equal to half of the whole trading profit of the last fiscal.

The Mangalore-based Corporation Bank had posted a trading profit of Rs 280.33 crore in the last financial year.

As per an Icra report, the decline in the sovereign yield curve, as witnessed during April and May, could boost public sector bank's profitability.

Yields on the benchmark 10-year government securities (G-Secs) declined by around 60 basis points in the first two months of the fiscal, prompting a sharp increase in G-Sec trading volumes, the report added.

Last week, State Bank of India had also said it would post a considerable rise in treasury profits in the first quarter.

"We have taken advantage of the lower interest rate (in G-Secs). What we did in the January-March quarter was that we didn't sell much...We took a conscious call to hold on as we felt that interest rate would go down further.

"This has paid us rich dividend and profits from sale of G-Secs and other bonds is likely to be more than last fiscal's annual figure (Rs 213 crore) in the first quarter," SBI deputy managing director and group executive for global markets, P Pradeep Kumar had told PTI.

Overall, the SBI treasury is eyeing to contribute Rs 1,500 crore to the bottom-line this fiscal from its domestic operations, up from Rs 810 crore last fiscal.

On the impact of the falling rupee on the bank, the bank official said it would have no impact. "Whatever impact the rupee depreciation will have, it will be on merchants' books. Also, our propriety trading in forex is very small to have any impact."