The Hindu Business Line : Treasury profits boost Corporation Bank net

New Delhi, April 26 Aided by a sharp jump in treasury profits, better NPA management and a surge in core business operations, Corporation Bank on Saturday reported a 37.09 per cent rise in net profit for the financial year ended March 31, 2008 at Rs 734.99 crore against a net profit of Rs 536.14 crore in the previous year.

For the period under review, the bank’s treasury profits (net of depreciation) were Rs 140 crore, which represented a 105 per cent increase over treasury profits of Rs 68 crore in 2006-07.

In 2007-08, Corporation Bank provided a lower amount towards bad debts at Rs 123 crore (including agriculture) against Rs 186 crore allotted in the previous year. Moreover, the net interest income increased by 139.55 crore during the year ended March 2008, representing a 10.70 per cent increase.

On whether Corporation Bank had exposure to derivatives, Mr B. Sambamurthy, Chairman and Managing Director, said the bank has not been involved in any “exotic derivatives” since September 2006. “We had then taken a conscious decision in 2006 itself that we will not get involved in complex derivatives,” Mr Sambamurthy said.

However, the notional amount of derivatives outstanding for the bank was about Rs 180 crore (for two companies). Their mark-to-market value as on March 31, 2008 was Rs 20 crore. “They are very big companies. They are not small and medium enterprises. As big corporates, they themselves have huge exposure to foreign currency through external loans, etc. The question of litigation with them does not arise,” he said.

To pay 60% final

Meanwhile, the board of directors has declared a final dividend of 60 per cent, taking the total dividend for the year 2007-08 to 105 per cent. In 2006-07, the total dividend declared was 90 per cent.

On whether the bank plans to raise fresh capital this fiscal, Mr Sambamurthy indicated that the bank may raise Tier-II capital as it had headroom of over Rs 3,000 crore. However, the bank has no immediate plan to raise Tier-I or Tier-II capital.

On expanding its footprint abroad, Mr Sambamurthy said that the bank was exploring the possibility of setting up a subsidiary in the UK. “We are only exploring the possibility. We have not finalised it,” he said. The bank expects to inaugurate a representative office in Dubai in 4-5 weeks.

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