Financial Daily from THE HINDU group of publications
Saturday, May 15, 2004
Financial Daily from THE HINDU group of publications Saturday, May 15, 2004 |
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Money & Banking
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Financial Performance Corporate Results - Private Banks ING Vysya plans for asset recast venture with ACTIS — Net profit drops to Rs 59 crore Our Bureau
Mr Bart Hellemans
Bangalore , May 14 ING Vysya Bank has proposed setting up a joint venture asset reconstruction company along with ACTIS (formerly Commonwealth Development Corporation, UK). Speaking to Business Line, Mr Bart Hellemans, Managing Director and Chief Executive Officer, said: "ING will only be a minority stakeholder in the venture." Under the current guidelines, asset reconstruction companies are expected to be capitalised at least Rs 20 crore with a minimum capital adequacy ratio of 15 per cent. He said that ING hoped to transfer some of the non-performing assets to this company. ING Vysya's board also advised the top management to explore avenues for raising additional equity, he said. Once this was firmed up, the management would have to revert back to the board. The additional capital was required for growing the asset books, he added. ING has a tier-one capital (networth) of Rs 539.43 crore and tier-two capital, (subordinated debt in excess of 5-year maturity, investment fluctuation reserves and revaluation reserves). This translated into a capital to risk weighted asset ratio of about 11.2 per cent in 2003-04, up from 9.81 per cent the previous year. In addition, the bank would also be examining the option of inorganic growth. This would imply acquisition of another bank. However, Mr Hellemans said, "We will look at acquisition only if the price is right." Referring to the bank's results for the 2003-04, he said, the bank had made a net profit of Rs 59 crore, down from the previous year's figure of Rs 86.35 crore. The reduction in profit despite the Rs 20-crore increase in operating profit to Rs 262 crore in 2003-04, was due to higher provisions made during the period. The bank made a prudential provision of Rs 71.52 crore which was charged on the basis of the realisable value. In addition, the bank also made depreciation provisions on some of its investment categorised as available for sale amounting to Rs 20 crore. Gross provisions made during the year was Rs 187.35 crore, up from 118.20 crore in 2002-03. He said that the bank had decided to take this hit since yields on investments had bottomed out.
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