The Hindu Business Line : Syndicate Bank seeks Govt nod to issue 8 cr shares

Tech savvy
The bank appoints Standard Chartered, Citibank and Deutsche Bank for its planned $175-million Medium Term Note Issue.
It has improved technology use by extending its online loan approval facilities to education, small and medium enterprises and farm advances.

Our Bureau

Bangalore, Jan. 29 Public sector Syndicate Bank has appointed Standard Chartered, Citibank and Deutsche Bank for its planned $175-million Medium Term Note Issue (MTN).

Syndicate Bank’s Chairman and Managing Director, Mr C.P. Swarnkar, said, “The rating exercise is still on and will be known over the next four to six weeks.” In addition the bank had also sought Government approval for issuing about 8 crore equity shares to the public.

Mr Swarnkar admitted that the MTN pricing was a major issue. “We will weigh the options and then decide on the method of capital to be raised,” he said.

Some of the potential subscribers had sought pricing as much as 350 basis points over the London Interbank offered rate, in view of the tightening global liquidity situation. Syndicate Bank currently has a capital to risk weighted asset ratio of 11.99 per cent. However, its tier one capital was 6.99 per cent or 99 basis points over the prescribed threshold of 6 per cent.

Net rises

The bank’s net profit for the third quarter of the current financial year 2008 was Rs 273.20 crore, a 21 per cent increase over the corresponding period of the last financial year. The net was buoyed by a whopping 243 per cent rise in treasury profits. Treasury profit in Q3 was Rs 153.40 crore, up from Rs 44.76 crore.

The treasury profits neutralised the drop in net interest income (NII) during the period. The NII was Rs 1,510 crore, down from Rs 1,546 crore.

Gross income of the bank in Q3 was Rs 2,266 crore up from Rs 1,776 crore during the corresponding period of the last financial year.

Interest Income during the period was Rs 1,987 crore, up from Rs 1,736.64 crore. The increase was partly due to increase in advances.

Outstanding advances for the year so far was Rs 56,086 crore or a 13 per cent rise over the corresponding period of last year.

Besides, re-pricing pushed up the average yield on advances to 10.56 per cent up from 9.32 per cent for the period.

The bank’s gross expenditure was Rs 1,893 crore up from Rs 1,456.21 crore. This was largely on account of rise in interest expenditure on account of deposit accretions. Interest expenditure in Q3 was Rs 1,512.97 crore as against Rs 1,079.37 crore. Outstanding deposits in Q3 were Rs 85,572 crore or a 13.65 per cent over the Q3 FY07.

However, Mr Swarnkar said, “We have taken a decision to cut back on bulk deposits through the bid route.”

As for the new initiatives, the bank had improved its technology use by extending its online loan approval facilities to education, small and medium enterprises and farm advances.

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