South Indian Bank sees 50% growth in fee income

Kerala-based mid-sized listed bank, South Indian Bank (SIB), is aiming at a 50 per cent growth in its fee income in the next two to three years to further supplement its net profit, according to managing director and chief executive VA Joseph.

In its September quarter results, the bank witnessed a higher-than estimated net profit on a sharp improvement of net interest margin, resulting in a net interest income at Rs 260 crore. Analysts, however, expressed concern over low share of fee income.

“The low fee income was primarily because of lack of aggressive corporate lending. We are opening six dedicated corporate banking facilities in major cities like Mumbai, New Delhi, Kolkata, Hyderabad, Chennai and Bangalore and are expecting corporate lending business of around Rs 1,000 crore from each of these branches, which will help us increase our fee income like letters of credit and bank guarantees,” he told mediapersons, on the sidelines of a press conference to announce the opening of 15 new branches in Hyderabad on Monday.

The bank is also looking at increasing its fee income by selling third-party products like insurance policies of life and general insurance companies and gold coins.

According to Joseph, fee income for the financial year ended March 2011 was around 20 per cent of the total income.

Joseph said the bank had revised its growth targets and was now looking at a total business of Rs 1 lakh crore with 8,000 employees spread across 800 branches and ATMs by the end of March 2014.

The bank, he said, was awaiting the capital markets to improve to place a Rs 1,000-crore equity with qualified institutional investors. “We don’t see any urgency to raise funds as we are comfortable with the capital adequacy of nearly 14 per cent, which we will maintain even after achieving around 25 per cent growth in business and the profits earned during this financial year,” Joseph added.