Corporation Bank announced a 10 per cent fall in net profit for the quarter ended March 31, 2005 at Rs 107.57 crore, down from Rs 119.49 crore in the corresponding period of the previous year. | |
| The bank declared a dividend of 65 per cent for the year, including an interim dividend of 30 per cent. For the financial year 2004-05, the bank's net profit declined by 20.2 per cent to Rs 402.16 crore (Rs 504.13 crore). |
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| "The fall in profits is on account of rising interest rates. The bank has taken a one-time provisioning hit of Rs 280 crore by transferring part of its government securities portfolio to the held-to-maturity category, in order to shield itself from further interest rate rises," said V K Chopra, CMD, Corporation Bank. |
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| Most Indian banks are expected to post a drop in their bottom lines this year. This is largely on account of treasury profits disappearing as interest rates have hardened since the beginning of 2004-05. Many banks have also taken a one-time provisioning hit as they have rejigged their investment portfolios to shield themselves from a further hardening in interest rates. |
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| Meanwhile, Corporation Bank is open to making a strategic investment in another commercial bank. "It can be a small stake or even a routine portfolio investment so long as it adds to our bottom line. Our board has approved a strategic investment in another bank," said Chopra. |
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| The bank may also consider a dilution of the government's 57 per cent stake in it in order to increase the liquidity of the its scrip. Over 80 per cent of the bank's shares are not tradeable since they are held by the Centre and by the Life Insurance Corporation of India. |
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| Corporation Bank's total income for the last quarter ended March 31 increased by 8 per cent to Rs 703.25 crore (Rs 648.41 crore) and total expenditure fell by 5 per cent to Rs 443.37 crore (Rs 467.68 crore). However, on account of a one-time provisioning of Rs 280 crore, the public sector bank reported a fall in its bottomline. |
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| During the quarter, net interest income or the core income of the bank jumped by 16.6 per cent to Rs 286.61 crore (Rs 245.86 crore). Other income rose by 33 per cent to Rs 126.60 crore (Rs 95.23 crore). The bank's advances for the year grew by 33 per cent to Rs 18,546 crore and deposits by 17 per cent to Rs 27,233 crore. Provisions and contingencies increased to Rs 93.65 crore. |
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| Net non-performing assets (NPAs) as a percentage of net advances decreased to 1.12 per cent from 1.80 per cent in March 2004. The bank's capital adequacy ratio was 16.23 per cent. |
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