The Hindu Business Line : Rise in advances lifts UTI Bank Q3 net by 40 pc

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Rise in advances lifts UTI Bank Q3 net by 40 pc

Our Bureau

`Robust rise in demand deposits; no immediate impact of rising interest rates'

Dr P.J. Nayak

Mumbai , Jan. 12

Increase in net advances and higher interest margin have enabled UTI Bank to post a 40 per cent rise in net profit at Rs 184.61 crore for the third quarter ended December 31, 2006 against Rs 131.71 crore in the year ago period.

Total income also increased to Rs 1,469.36 crore during the quarter from Rs 920.12 crore. Other income, backed by treasury gains, rose by over 61 per cent.

Net interest income was up by about 45 per cent to Rs 415.84 crore (Rs 287.44 crore).

"Lower cost of funds aided by the much higher share of demand deposits, together with a rapid growth in assets, contributed to the rise in NII," said a bank statement. The net interest margin (NIM) improved to 3 per cent (2.94 per cent).

Net advances of the bank grew by 66 per cent to Rs 32,337 crore (Rs 19,531 crore). The daily average cost of funds was marginally up at 5.53 per cent (4.86 per cent).

Retail advances registered a 59 per cent growth and now accounts for 28 per cent of the total advances of the bank.

"Home loans and auto loans have shown higher growth and we do not see any immediate impact of rising interest rates on our retail loan portfolio," said Dr P.J. Nayak, Chairman and Managing Director, UTI Bank.

As on December 31, total deposits of the bank increased to Rs 50,920 crore (Rs 34,025 crore).

The share of low-cost deposits — Savings Bank and Current Account — was 37 per cent (35 per cent). "The bank has recorded a robust rise in demand deposits which funded large size of our assets and pushed aside the impact of rising interest rates," said Dr Nayak.

The bank has 481 branches and extension counters, and 2,126 ATMs and has plans to open more branches this year. "The bank's capital adequacy ratio is quite comfortable and we may raise some amount of tier-II capital," he said.