The Hindu Business Line : State Bank of Mysore to raise Rs 400 cr via bonds

Bangalore, Oct. 19 State Bank of Mysore (SBM) intends to raise Tier II capital through bond issues of up to Rs 400 crore during the year to support its asset growth.

In addition, the bank is also planning a follow-on public issue, though some technical issues remain to be solved.

The SBM Managing Director, Mr P. P. Pattanayak, told Business Line “We are awaiting regulatory clearance from the Reserve Bank of India.” The issues involved splitting the SBM stocks to a face value of Rs 10 per share as against the current Rs 100 per share. The amendments to the SBI Act already provide for the stock split, but SBM would still need regulatory approval, Mr Pattanayak said.

SBM’s Treasury operations for the second quarter of the financial year 2007-08 (FY08) had an operating loss of Rs 4.28 crore, though it reported a 54-per cent jump in net profit for the period. The treasury losses, he said, were partly on account of high provisions for depreciation in Q2 for Rs 3.95 crore.

An SBM statement on segment wise revenues showed that core banking operations contributed almost entirely to the Q2 profits. Core banking operations generated profits of Rs 161.83 crore, an increase of 44 per cent over the corresponding period of FY07. The profits were driven partly by repricing of assets that had taken place during the period. The repricing had resulted in raising the average yield on advances to 10.17 per cent.

What also contributed to the profits during the period was the reduction in the gross non-performing assets of the bank. Gross NPAs amounted to Rs 365.96 crore but was down to 2 per cent as against 2.29 per cent on March 31 this year. This was mainly on account of rehabilitation of assets that included recoveries.

Gross advances of SBM rose 33.54 per cent during the period to Rs 18,326 crore in Q2 over the previous year. This was well over the industry average growth of 22.40 per cent for the period. This translated into a credit-deposit ratio of 77 per cent.

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