SBH plans to raise upto Rs 400 cr via tier-II bonds this FY

State Bank of Hyderabad's net profit more than doubled to Rs 334 crore during the third quarter ended December 31, 2014

Public sector lender State Bank of Hyderabad may raise up to Rs 400 crore before end of the current fiscal by way of tier-II bonds to meet the future credit demand, said SBH Managing Director Santanu Mukherjee.

"We might raise tier-II bonds before March of this financial year. We plan to raise Rs 350 crore to Rs 400 crore. Exact figure depends on market conditions and requirement," Mukherjee told reporters last night after announcing the third quarter results.

"As of now it does not look like we may need tier-I capital this year or even next year. We are very sure our capital adequacy rate will be maintained in the range of 11.25 to 11.50% which is higher than the benchmark of 11% mandated by our board and also RBI prescription. However, it all depends on the credit growth and demand," the banker said when asked about immediate capital requirements.

SBH's net profit more than doubled to Rs 334 crore during the third quarter ended December 31, 2014, compared to Rs 119 crore in the corresponding quarter of the previous year.

The bank has shed over Rs 12,500 crore worth of high cost deposits during the quarter resulting in increase its net interest margin.

Mukherjee said though the shedding may result in pressure on the liquidity position, the bank is trying to fill the gap by improving low cost deposits such as Current and Savings Account (CASA).

"We have got low cost deposits in the form of CASA by around Rs 7,000 crore. Apart from that, we have been aggressively following up for retail deposits. We have launched some important schemes also for that. These (moves) helped up to come out of the clutches of high cost deposits. We are able to manage it quite well," he said.

The bank's CASA deposits grew by 13.17% to Rs 33,055 crore during the quarter ended December 31.

Replying to query, he said the growth in the credit demand may be in the range of 17 to 18% in the coming fiscal.