Corporation Bank plans to raise Rs 5,000 cr in FY20

Public sector lender Corporation Bank plans to raise up to Rs 5,000 crore through issuance of fresh equity shares, debt instruments on private placement basis, rights issue or through QIP in the current fiscal.

The bank will seek approval from shareholders at its meeting scheduled for June 29 for raising of capital by issuance of fresh equity shares or by issuance of additional tier I or tier II capital as per Basel III guidelines, Corporation Bank said in its annual report 2018-19.

The bank said it will create such number of equity shares and/or debt instruments on a private placement/public issue for investors for an amount not exceeding Rs 5,000 crore in one or more tranches.

On the intent of the capital raise plan, Corporation Bank said it may require additional capital from the market to support the projected business requirements and at the same time maintain healthy CRAR, in line with capital raising plan and as per reform agenda undertaken.

Under Basel III norms, the bank is required to maintain total CRAR (Capital to Risk Adjusted Assets Ratio) of 10.875 per cent, it said in the report.

The lender had posted a net loss of Rs 6,332.98 crore in 2018-19 as against a net loss of Rs 4,053.94 crore in the previous year.

Total income too fell to Rs 17,494.70 crore compared to Rs 19,941.41 crore.

"Operating profit of the bank stood at Rs 3,894.47 crore during the year 2018-19. However, with increased provisioning on NPAs, the bank posted net loss of Rs 6,332.98 crore for the year 2018-19," said P V Bharathi, Managing Director & CEO of the bank.

During the fiscal, there were cash recovery and upgradation of NPAs of Rs 5,192.76 crore, up from Rs 4,508.76 crore in the previous financial year, the bank said in the report.

Due to loss, the board of directors of the bank has not recommended any dividend for 2018-19.

Bharathi said the severe pressure on asset quality during the year ended March 2019 was not an isolated case but was the part of overall industry phenomenon.

The bank said the focus will be on recovery of bad loans, emphasis on retail loan portfolio and will continue with rigorous efforts of credit monitoring and to arrest effectively the rising trend in slippages during coming years.

Its gross non-performing assets (NPAs) stood at 17.35 per cent of the gross advances at March-end, 2019 against 15.35 per cent a year ago.

Net NPA ratio too came down to 5.71 per cent from 11.74 per cent earlier.

Also, there were recoveries to the tune of Rs 706.88 crore in written-off accounts during the year, up from Rs 318.06 crore recovery a year ago.