The Hindu Business Line : South Indian Bank may offer 1:4 bonus

Coimbatore, June 29 South Indian Bank shareholders are likely to get one bonus share for every four shares held by them. While this is the recommendation made by the bank’s board, which met at its headquarters in Thrissur on Saturday, the same is subject to shareholders approval.

The bank has informed the stock exchange about this decision. Its Chairman, Dr V.A. Joseph, told Business Line that the recommendation would be placed for shareholders’ approval at the next meeting, slated for August 18.

Stating that this was the first bonus issue in the bank’s 79-year history, he said “incidentally, it is also the year in which we had recommended a record dividend of 30 per cent.”

The bank’s dividend has always hovered in the 20-25 per cent range. It touched a high of 28 per cent in 1998-99.

“Our profit crossed the Rs 150-crore mark in the just-ended fiscal. We wanted to reward our shareholders,” he said.

Regarding the future prospects for the banking sector, he said “There is a lot of uncertainty, but we will strive to achieve our net profit target of Rs 190 crore this fiscal.”

How does he plan to achieve this? “We had, even at the beginning of this year decided to add 5 lakh new customers in savings account, and are working towards this. This addition will increase our CASA by 3 per cent.”

Taking the cue from the bigger banks, the bank has also decided to increase its prime lending rate by 50 basis points to 15.5 per cent from July 1.

Asked if such an increase in lending rates would affect credit off take, Dr Joseph said “our existing customers credit requirement is around 15-16 per cent. Another 10 per cent should not be an issue. We are trying to rope in new customers, accounts shifting from other banks and the like.”

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South Indian Bank may offer 1:4 bonus