The Hindu Business Line : Syndicate Bank's full-year net rises 33% to Rs 716 cr

Mr C.P. Swarnkar (right), Chairman and Managing Director, Syndicate Bank, with Mr George Joseph, Executive Director, at a press conference in Bangalore on Tuesday. - G.R.N. Somashekar

Bangalore May 8 Syndicate Bank reported a 33.5 per cent increase in net profit for the financial year 2006-07 at Rs 716 crore.

Speaking at a press conference here, the Syndicate Bank's Chairman and Managing Director, Mr C.P. Swarnkar, said, "The bank's board has recommended a final dividend of 13 per cent for the financial year 2006-07." This would take the total dividend for the year to 28 per cent inclusive of the interim dividend of 15 per cent.

The profits were driven by the 40 per cent gallop in advances. Advances were Rs 52,839 crore against Rs 37,660 crore the previous year. The increase in advances with the rise in yield on assets by 56 basis points over FY06 helped the bank report a top line of Rs 6,659 crore against Rs 4,612 crore. Interest income, as a result, rose to Rs 6,040 crore (Rs 4,050 crore).

Mr. Swarnkar said the bank managed to contain its expenditure during the year. Gross expenditure was Rs 5,275.99 crore (Rs 3,604.36 crore). Interest expenditure rose to Rs 3,890.02 crore (Rs 2169.55 crore).

However, the bank's deposit mobilisation also increased to Rs 78,634 crore, a 46.64 per cent increase over the previous year.

This translated into an average interest cost of just about 4.94 per cent. This was largely on account of its large pool of low cost deposits. In the financial year 2006-07 alone, Syndicate bank had opened about two million low accounts.

Despite the low-cost deposit base, its net interest margin was only 2.72 per cent, lower than some of its peer banks, that have reported NIMs over 3 per cent. However, the bank's interest income improved to Rs 2,150 crore (Rs 1,881 crore).

Mr Swarnkar said that in a rising interest rate scenario, what mattered was that cost to income ratios. This ratio for the bank improved to 50 per cent (58 per cent). As a result, it reported an operating profit of Rs 1,383 crore (Rs 1,008 crore).

What also contributed to its improved bottom lines was the improved recovery of Rs 520 crore during the year.

The bank's gross non-performing assets went down to 2.95 per cent from 4 per cent the previous year.

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