The Hindu Business Line : KVB net up; to pay 20 pc special dividend

Karur Vysya Bank's board has proposed a special dividend of 20 per cent in addition to the 100 per cent dividend (recommended for the third year in a row) taking the total dividend pay out for the fiscal 2005-06 to 120 per cent. Bank sources said the proposed special dividend is to mark the commemoration of the 90th year of the bank.

The KVB Chairman, Mr P.T. Kuppuswamy, said the bank had complied with all the prudential requirements prescribed for declaration of dividend without obtaining prior approval of the RBI.

Results

The bank has posted a net profit of Rs 135.35 crore (Rs 105.34 crore) for the just concluded fiscal, registering a 28.49 per cent growth.

Its capital funds increased to Rs 871.63 crore (Rs 760.88 crore), while the total reserves swelled to Rs 853.65 crore (Rs 742.90 crore). The bank has an Investment Fluctuation Reserve of Rs 70.85 crore, at 10.62 per cent of the investments under AFS (Available for Sale) and HFT (Held For Trading) category against the RBI's stipulation of five per cent.

Key ratios

The Chairman further said that the bank had de-risked its investment portfolio by transferring certain SLR investments from AFS to HTM category, recognising a depreciation of Rs 2.78 crore in its income account.

Its Capital Adequacy Ratio slipped to 14.79 per cent (16.07 per cent) and the gross NPAs to gross advances from 5.1 per cent a year ago to 3.91 per cent.

Deposits grew by 13.56 per cent to Rs 7,576.84 crore (Rs 6,672.19 crore), while advances increased by 20.25 per cent to Rs 5,555.44 crore (Rs 4,619.80 crore). The aggregate business grew by 16.30 per cent.

The relatively small increase of 12.79 per cent in its total income has been attributed to the fall in income from investments from Rs 265.93 crore a year ago to Rs 189.88 crore. The interest income from advances, on the other hand, swelled by 17.48 per cent to Rs 453.16 crore (Rs 385.74 crore). A major chunk of the 26.48 per cent growth in its non-interest income has come from treasury operations.

Derivatives

Mr Kuppuswamy said the bank had only in the last year forayed into derivatives trading on a calibrated basis and planned to use derivatives for effectively managing the interest rate risk embedded in the balance sheet. "We have initiated steps for delivering structured swap products to enable our clients manage their exchange and interest rate risk," he said.

What's ahead

On the roadmap, he said the bank would target to reach deposits of Rs 9,000 crore and advances of Rs 6,750 crore during 2006-07.

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