The Hindu Business Line : State Bank of Mysore plans stock split

Addressing a press conference, the SBM Managing Director, Mr Y. Vijayanand, said: "We have proposed raising the funds through a combination of equity and tier two (subordinated debt) after amendments to the State of India Act is passed."

The equity raising was likely to be done either through a rights issue or through the initial public offering route, he added.

The bank also proposed to have a stock split simultaneously.

The bank reported a net profit of Rs 216.71 crore for financial year ended March 2006, up 5.07 per cent over the previous year. Net profit was Rs 206.25 crore. The net profit increase was despite the drop in operating profit during the period to Rs 437.86 crore from Rs 451.66 crore. The drop in the operating profit, Mr Vijayanand, said was mainly on account of a fall in treasury profits. Treasury profits fell to Rs 90.57 crore in FY06 from Rs 151 crore during the previous year.

The drop in treasury profits was offset by an increase in operating income that rose to Rs 958.23 crore in FY06, up from Rs 930.70 crore. This was mainly on account of the increase in advances in FY06 to Rs 12,063.16 crore from Rs 9,124.50 crore.

During the period, farm advances grew 35 per cent to Rs 1,657.58 crore. Retail advances grew 52 per cent to Rs 1,323.43 crore.

SBM reported a gross expenditure of Rs 1,255.46 crore (Rs 1,102.12 crore). The increase was contributed largely by a rise in interest expenditure in FY06 to Rs 735.09 crore (Rs 623.03 crore). Operating expenditure also went up to Rs 520.37 crore (Rs 479.09 crore).

In FY06, the bank also managed to reduce its gross non-performing assets to 3.30 per cent of its advances to 4.56 per cent. This was mainly on the back of good recoveries. It managed to recover Rs 75 crore.

For FY07, SBM, Mr Vijayanand said, was targeting a business of Rs 6,900 crore and maintaining the current pace of double-digit growth.

SBM hoped to receive Rs 25 crore out through the one time settlement of outstanding dues from the State government-owned NGEF Ltd that is currently lying closed.

NGEF asset release

The Managing Director said once the settlement was made, the bank would release its charge on the assets of NGEF. This would allow the Karnataka government utilise the land for construction of the Bangalore Metro Rail corridor.

The settlement, he said, was being made out of funds received for the Bangalore Metro project. The outstandings have already been fully provisioned, he said in line with guidelines of the RBI.

SBM is the consortium leader of the funding agencies to NGEF. The total outstanding to all the banks from NGEF was in excess of Rs 80 crore bankers said. The settlement would include all the consortium members. The settlement was also part of the rehabilitation package for NGEF. This would include some concessions as part of a haircut the banks would have to take.

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