The Hindu Business Line : South Indian Bank hoping for an encore performance

The Chairman and Managing Director, South Indian Bank, Dr V.A. Joseph, has four good reasons to believe that the bank will repeat its good performance of last year.

In 2005-06, the bank's net profit rose to Rs 50 crore from Rs 8.7 crore in the previous year, riding on the back of a Rs 160-crore NPA recovery. For the current year, the bank has set itself an identical target for NPA recovery but Dr Joseph's optimism stems from other reasons.

No `wage arrears'

First, the bank will not carry the Rs 6-crore `wage arrears' burden that it did last year. Secondly, it will not incur the Rs 9- crore expenditure relating to public issue. (Last year, the bank came out with its follow-on public issue.)

Thirdly, the bank is in the process of tying up with four mutual funds companies for distribution of their products — Reliance, Franklin Templeton, Tata and Sundaram. Dr Joseph expects at least Rs 5 crore of commission income.

Finally, the Rs 22.5-crore that South Indian Bank should get for its stake in Bharat Overseas Bank from Indian Overseas Bank, will come this year.

In addition to these, NPA recovery will also help. As at the end of last year, the bank had Rs 328 crore of NPAs on its books, of which it hopes to recover at least Rs 160 crore. Without wanting to give names, Dr Joseph told Business Line that a few corporate accounts were likely to be settled this year.

Dr Joseph was here in connection with holding interviews for recruitment. He said that over the last two years, the bank had recruited 240 professionals. This year, the bank would recruit 60 more, he added.