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V. Sreenivasa_Murthy

Thrust on core deposits: The Chairman and Managing Director of Syndicate Bank , Mr George Joseph (left) and Executive Editor, Mr V.K. Nagar, at a press conference in Bangalore on Friday. – .

Our Bureau

Bangalore, Oct. 31 Public sector Syndicate Bank reduced its bulk deposits by Rs 1,055 crore on year on year basis in a bid to bring down the cost of working funds.

Speaking to journalists here on Friday, the Chairman and Managing Director of Syndicate Bank, Mr George Joseph, said: “The bank has taken a conscious decision to shed bulk deposits and focus on raising its core deposits. Bulk now comprised less than 33 per cent of our overall deposits.”

Core deposits that included current and savings accounts were Rs 62,750 crore in the second quarter of 2008-09.

Gross deposits during the period were Rs 95,756 crore.

Despite the reduction in bulk deposits, Syndicate Bank’s cost of working funds hardened to 6.89 per cent in Q2 this year, up from 6.65 per cent the corresponding period of the last year.

Mr Joseph said that during the same period the bank was able to re-price some of its assets. “We are now in a sellers market and therefore at an advantage,” he said.

Re-pricing of assets implied that the bank was able to boost its interest income. Re-pricing some short-term assets pushed up the interest earnings by as much as 5 per cent, he said.

In addition, the bank had also reviewed some of its credit lines in Q2 for taking advantage of the high call rates in the markets, he added.

Asset re-pricing benefits were expected to extend to the third quarter, he added. The re-pricing pushed up its average yield on assets to 10.78 per cent up from 10.51 per cent for the period.

As a result, interest earnings rose to Rs 2,369.95 crore in Q2 this year, up from Rs 1,938.60 crore during the corresponding period last year.

The improved interest offset the reduction in other income that included treasury operations. Other income dropped to Rs 157 crore in Q2, down from the previous year’s Rs 216.40 crore.

Syndicate Bank’s net profit consequently improved to Rs 261.91 crore in Q2, up 15 per cent over the corresponding period of the last financial year.

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