The Hindu Business Line : UTI Bank net jumps 45% on growth in advances, income

The bank’s net profit was at Rs 174.98 crore for the first quarter ended June 30, 2007 against Rs 120.55 crore during the corresponding quarter previous year.

Total income also rose to Rs 1,879.29 crore (Rs 1,178.42 crore).

Other income has shown a sharp rise of over 52 per cent. Other income includes gains from securities transactions (net of premium amortised on HTM securities), commission earned from guarantees/letters of credit, fees earned from providing services to customers, selling of third party products and ATM sharing fees.

Trading income (treasury income) grew by about 344 per cent to Rs 70.79 crore (Rs 15.93 crore) and fee income rose 47 per cent.

This growth in earnings has been possible because of the rapid expansion in advances, said a statement from the bank.Net interest income increased by 39 per cent.

A strong growth in the levels of advances and investments, together with a higher share of demand deposits, contributed to the rise in NII, said the statement.

Downward pressure

Net interest margin for the first quarter increased marginally to 2.72 per cent, from 2.68 per cent in the corresponding quarter previous year, but was down from 3.06 per cent in the fourth quarter of 2006-07.

“The downward pressure on spreads has arisen partly on account of the acquisition of short-term priority sector assets towards the end of the final quarter of the previous year, for purposes of regulatory compliance. As these assets go off the bank’s books, the NIMs can be expected to again rise,” the statement pointed out.

UTI Bank has recorded a 45 per cent rise in deposits to Rs 61,091 crore and 60 per cent rise in net advances to Rs 41,285 crore.

The share of low-cost deposits — Savings Bank and Current Account — rose to 38 per cent. The daily average cost of funds increased to 6.43 per cent (5.45 per cent).

Healthy growth

“UTI Bank’s result has been above the market expectations. The bank has recorded a very healthy growth in deposits and advances. In the case of deposits, the bank has recorded 54 per cent rise in demand deposits, which is a good sign for the bank,” said a banking analyst.

Net non-performing assets remained at 0.59 per cent (0.73 per cent).

The bank intends to raise fresh Tier-I capital in the current financial year. The current capital adequacy ratio is at 11.5 per cent (10.28 per cent).

UTI Bank’s shares ended at Rs 635.50, against the previous close of Rs 632.50 on the BSE.

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