Saraswat Bank plans to acquire two urban co-ops

Saraswat Cooperative Bank, India’s largest urban cooperative bank (UCB), is planning two acquisitions to increase its footprint.

The Mumbai-based bank has taken over seven UCBs in the last three years with business of Rs 3,200 crore. The Reserve Bank of India encourages healthy UCBs to buy their weaker rivals to improve the financial health of the sector.

Saraswat Chairman Ekanath Thakur said the bank aimed to grow its business (deposits plus advances) to Rs 25,000 crore by the end of March 2011 through a combination of organic and inorganic (acquisitions) routes. “We have 70 (acquisition) proposals before us. One or two more mergers could be possible. The bank also plans to add 70 branches, out of which 50 will be new branches”, Thakur said.
 

REPORT CARD
	2007-08	2008-09
Net profit	202.26	210.79
Deposits	11,430.82	12,918.85
Advances	7,448.31	8,11.41
Gross NPAs	420	365
Cost of deposits*	6.96	7.39
Yield on advances*	11.04	11.83
Net interest margin*	3.12	2.97
Capital adequacy*	10.85	10.92
* figures are in %, else other figure are in Rs. cr.

 

The bank posted a net profit of Rs 210.79 crore in 2008-09, up from Rs 202.26 crore in 2007-08. The board has recommended 20 per cent dividend for 2008-09. It grew its deposits by 13.02 per cent to Rs 12,918.85 crore from Rs 11,430.82 crore a year ago. The share of low-cost deposits (current and saving) in the total deposits was around 25 per cent.

“Our share of CASA (current account and savings account) is low compared with the public sector banks and we aim to raise it to 30 per cent”, he said. Its cost of deposits rose 7.39 per cent from 6.96 per cent.

Advances rose just 8.89 per cent to Rs 8,110.41 crore from Rs 7,448.31 crore. The bank reduced its export advances to the diamond industry from Rs 646.07 crore to Rs 391.30 crore due to adverse business climate. Its yield on advances improved to 11.83 per cent from 11.04 per cent a year ago. Its net interest margin declined to 2.97 per cent from 3.12 per cent.

On slow business growth in FY’09, the chairman said, “A part of the business of cooperative banks, along with foreign and private banks, shifted to public sector banks in 2008-09. This was due to fear psychosis after the global financial crisis in the aftermath of the Lehman Brothers’ bankruptcy”.

The bank plans to offer 50 shares of Rs 10 each to its 50,000 depositors to broad-base ownership. At present, most shares are held by its borrowers.

The bank’s gross non-performing assets declined to Rs 365 crore from Rs 420 crore. It has restructured 29 accounts involving advances worth Rs 275 crore.