SBM to raise Rs 500 cr in FY12

The State Bank of Mysore (SBM), an associate of the State Bank of India, is planning to raise around Rs 500 crore in the present financial year through the issuance of Tier-II bonds to support its future business growth.

“We aim to increase our advances portfolio by Rs 9,000 crore and deposits by Rs 7,000 crore. To attain such a business growth, we need funds through Tier-II bonds issue in the present fiscal,” Dilip Mavinkurve, managing director, SBM, said.

He also said that the bank has an adequate headroom for raising funds through Tier-II bonds. The public sector lender has posted a deposit growth rate of 11 per cent to Rs 43,225 crore, while its advances grew 15 per cent to Rs 34,442 crore by the end of last financial year. The bank aims to attain 23 per cent increase in business growth to Rs 96,000 crore in the current financial year and wants to cross Rs 1,00,000 crore mark in next 18 months.

 

“To attain the desired business growth, we need capital through issuance of bonds,” he said. He, however, said the bank didn’t have any plan to raise funds through Tier-I bonds. Earlier, the SBM has raised Rs 540 crore in the middle of last year through a rights issue to ramp up its capital base. The bank has posted a 32.5 per cent rise in its net profit to Rs 163.83 crore in the fourth quarter of last financial year-ended March 31, 2011, on the back of sound growth in core earnings. The total income during this period rose 15.7 per cent to Rs 1,218.3 crore compared to Rs 1,052.3 crore reported last year.

The operating profit of the bank increased 4.6 per cent to Rs 304.22 crore in this quarter against Rs 290.91 crore reported an year earlier.

“We are hopeful of maintaining the profitability in the current financial year on the back of our focus on SME and agriculture sector,” Mavinkurve said. Net interest income of the bank rose by 8.85 per cent to Rs 406 crore in the fourth quarter of the present financial year. On an annual basis, the net profit of the public sector lender increased 12.3 per cent to Rs 500.62 crore in FY11 compared with Rs 445.77 crore an year earlier. “The lower year-on-year growth is caused by the necessity to make higher provisions towards non-performing assets (NPA),” Mavinkurve said. The total income during FY11 grew 13.8 per cent to Rs 4,534.26 crore against Rs 3,884.63 crore posted in an year ago period.

The net interest income of the bank increased 32.3 per cent to Rs 1,636 crore compared with Rs 1,236 crore reported earlier. Similarly, the net interest margin (NIM) went up to 3.71 per cent from 3.19 per cent an year ago. “NIM will be flat or may witness a downward trend in the current financial year due to overall inflationary environment,” he said.

While cost of deposit for the bank declined to 5.56 per cent from 6.01 per cent due to increase in CASA (current account, savings account) deposit to 33.97 per cent from 31.06 per cent, yield on advances grew to 10.33 per cent from 10.24 per cent earlier.

During the last fiscal, deposits of the bank grew by 11 per cent to Rs 43,225 crore and advances went up by 15 per cent to Rs 34,442 crore.

“We expect a credit growth of 22-24 per cent in the current financial year,” he said.However, non-performing asset of the bank saw an upward trend in FY11. While gross NPA increased to 2.51 per cent from two per cent, net NPA of the bank increased to 1.38 per cent from 1.02 per cent an year earlier.

“NPA numbers increased due to slippages of around Rs 280 crore on some agri and SME loan accounts,” Mavinkurve said.

NPA coverage ratio in the last fiscal stood at 67.60 per cent and the bank aims to reach mandatory 70 per cent mark by September, 2011, he added. On the capital adequacy front, the capital to risk weighted assets (CRAR) under Basel-II was at 13.76 per cent against the benchmark of nine per cent.

In the current financial year, the bank aims to achieve a business of Rs 96,000 crore with opening of 90 new branches.