City Union Bank net profit up 10%

The bank is planning to up its FII limit in the wake of increased interest from these investors

Kumbakonam-based City Union Bank Ltd posted a 10.2 per cent increase in net profit at Rs 99.49 crore for the quarter ended June 30, 2014, as against Rs 90.28 crore for the same period previous year. Total income was up 7.28 per cent to Rs 754.03 crore from Rs 702.87 crore.

Gross NPA grew to Rs 308.30 crore, which as a percentage was 1.91, during the quarter from Rs 192.11 crore (1.25%) during the same quarter last year. Net NPA stood at Rs 204.37 crore (1.28%) as against Rs 96.98 crore (0.63%).

"For the last two years apart from the economic downturn, Tamil Nadu has faced challenges like power shortage creating stress in the overall manufacturing sector, especially steel. We used to have 1.5 per cent of slippage every year, but last year we had double the slippage with one steel account becoming bad. We had another two three big steel NPAs, which we could sell to asset reconstruction companies since we had the collateral," said bank managing director and CEO N Kamakodi.

The bank had around Rs 370 crore on the NPA and it sold around Rs 310 crore to asset reconstruction companies. The major addition in NPA was from power-intensive manufacturing industry and one from a brewery.

During the one-year period, the advances portfolio increased five per cent from Rs 15,388 crore to Rs 16,153 crore.

To increase FII limit

Meanwhile, CUB has decided to enhance the FII limit from 35 per cent at present to 40 per cent, subject to the necessary approvals. It recently completed its QIP to raise Rs 350 crore, which was oversubscribed by 3.38 times aggregating Rs 1,181.39 crore, of which Rs 766 crore was from FIIs and DIIS had requested for Rs 415 crore.