The Hindu Business Line : High recoveries may help SIB post higher profits

SOUTH Indian Bank may see a steep jump in net profit for the first nine months of the current year due to provision reversal arising out of more-than-expected recoveries.

In the first nine months of the year, the bank's recoveries from NPAs amounted to Rs 100 crore, compared with Rs 60 crore in the same period last year. But there is another significant difference — last year, Rs 5 crore was added to the bottomline due to reversal of provisions. This time around, the write-back will be Rs 25 crore, according to the bank's Chairman and Managing Director, Mr V.A. Joseph.

Mr Joseph told Business Line that the bank was "confident" of achieving its target of Rs 175 crore of recoveries for the current year. The bank set itself an ambitious target, but had not expected to meet it so easily, he said.

The bank's net NPA would slide to below 2 per cent by the end of the year, down from 3.81 per cent as on March 2005.

Mr Joseph said the bank had gained from a surge in deposits, thanks to non-resident Indians putting money back in the bank after redemption of India Millennium Deposits. In the last one month, South Indian Bank received Rs 100 crore in deposits, which cost less than 5 per cent. When the results for the third quarter come out, the bank would have crossed the Rs 15,000-crore mark in total business, with deposits at Rs 8,500 crore and advances at Rs 6,500 crore, Mr Joseph said.

Meanwhile, the bank has taken management control of Hadi Express, a Dubai-based company that is into money transfer. South Indian Bank's staff will run the company, and the profits will be shared with the bank. However, the idea was not so much about profits as about customer acquisition potential, Mr Joseph said.