Higher interest slows Corporation Bank’s profit growth

Higher interest slows Corporation Bank’s profit growth

Mangalore Today News Network

Mangalore, July 29, 2011: The city-based Corporation Bank has registered a 5.29% increase in its net profit for the quarter ended June 2011. The net profit at Rs 351.45 crore was Rs 17.67 crore more than the net profit of Rs 333.78 crore registered by the bank at the end of first quarter of the last financial year. Operating profit for first quarter of this fiscal was Rs 576.41 crore, and earning per share was Rs 23.73 as against Rs 23.37 for the quarter one of fiscal year 2010-11.

 

 

"The interest paid on deposits resulted in low profit growth...our performance on all other key parameters is good,” said Chairman & Managing Director Ramnath Pradeep in a press meet. The cost of deposits went up to 7.27 percent as compared to 5.19 percent last year.

The bank saw almost 50 per cent jump in its net interest income over the last year at Rs 707.56 core and its total provisions were down to Rs 224 core from Rs 284 core in the same period last year.

However, a low percentage of cheaper CASA (current and savings account) deposits ratio at 24 per cent resulted in excessive dependence on high cost term deposits which have higher interest rates.

Pradeep said the bank would be targeting to take up CASA ratio to 30 per cent by end of 2011-12. The bank’s net interest margin also slipped to 2.10 per cent as compared to the year ago’s 2.46 per cent.

Total business as on June 30, 2011, stood at Rs196,686 crore and it increased by Rs 40,846 crore, a growth of 26.21 per cent on y-o-y basis.  Similarly, total deposits increased to Rs 117,782 crore up 29 per cent.