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Kumbakonam-based City Union Bank has posted a 32 per cent growth in net profit at Rs 58.51 crore in its first quarter results (for the three-month period ended June 30, 2011) announced today in Chennai.
Net interest income (interest income less interest expense) rose 30 per cent to Rs 120 crore for the period.
The bank's Managing Director and CEO, Dr N. Kamakodi, said the performance was reasonably satisfactory and the bank had managed to maintain the same momentum in its last 10 quarters.
Giving details of its performance, Mr Kamakodi said that the bank's net interest margin was at 3.59 per cent compared with about 3.52 per cent earlier.
The bank did not face any stress due to non-performing assets during this quarter. Its gross NPA level was at Rs 117 crore compared to Rs 112 crore at the end of March 2011. Gross NPAs were down to 1.22 per cent of advances compared with 1.30 per cent of advances in the corresponding period last year.
Dr Kamakodi said that the bank's cost of deposits was at 7.5 per cent, 32 basis points higher than what it incurred in the fourth quarter of last year. Yield on advances was at 13.05 per cent compared to 12.71 per cent in the fourth quarter.
To raise Rs 1,000 cr capital
Asked about capital raising plans, Dr Kamakodi said that the bank planned to raise about Rs 1,000 crore as capital in the next three to four years.
The bank plans to renew the permission that it had got from shareholders for raising Rs 300 crore through a qualified institutional placement (QIP). He said this would happen before the end of the year but the exact quantum and date of the capital raising would be decided later.
He said the bank was growing at about 6 to 7 percentage points faster than industry growth and this would necessitate some capital infusion if it wanted to keep its capital adequacy ratio at a comfortable 12 per cent plus and also enjoy a net interest margin of around 3.3 per cent in the long term.
He said the bank which has about 259 branches and 208 ATMs currently hopes to finish the year at about 300 branches and 450 ATMs. Seventy per cent of its branches are in Tamil Nadu, about 15 per cent in the other three southern States and the balance in the rest of the country. He said that future expansion would broadly follow a pattern where half the branches would be in Tamil Nadu, 25 per cent in other southern states and the rest in other parts of the country.
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