Syndicate Bank Q1 net down 60%

The Manipal-headquartered Syndicate Bank, the 7th largest public sector lender (in terms of total business), today reported 60.18 per cent drop in its net profit at Rs 87.89 crore for the first quarter ended June 30, 2008 compared to the corresponding quarter last year.

The drop in net profit was mainly attributed to steep provision of Rs 261 crore for mark-to-market losses made on investment portfolio.

The operating profit of the bank fell 6.6 per cent to Rs 293.76 crore during the first quarter compared to the same period last year, mainly due to pressure on interest margins.

The bank's net interest margin declined to 2.26 per cent from 2.76 per cent as on June 30, 2007. The cost of deposits moved up from 6.42 per cent in the first quarter of 2007-08 to 6.92 per cent in the quarter ended June 30, 2008.

The net interest income stood at Rs 503 crore, a decline of 8.04 per cent compared to the same quarter last year.

The total income of the bank increased by 13.98 per cent to Rs 2,279 crore during the first quarter compared to the same period last year, mainly aided by the growth in interest income.

The interest income for the quarter improved to Rs 2,132 crore, a growth of 15.47 per cent. The profit on sale of investments was Rs 28 crore for the quarter as against Rs 38 crore earned in the corresponding period last year.

Commenting on the results, George Joseph, Executive Director, Syndicate Bank said, "The bank's fundamentals are very strong. Despite MTM provisioning, we are hopeful of growing out net profit by 30 per cent to Rs 1,100 crore for the full year ending March 2009."

He further added that despite tightening of lending scenario, the credit growth will be in the range of 19-20 per cent.

The return on assets fell 0.33 per cent compared to 0.98 per cent and the net non performing assets went up to 1.03 per cent as against 0.82 per cent in the year ago period.

The capital adequacy ratio of the bank stood at 11.55 per cent compared to 12.62 per cent in the same quarter last year. The earning per share dropped to 6.74 per cent from 16.94 per cent in the first quarter of last year.