State-owned Corporation Bank’s first quarter net profit rose marginally by 5% year-on-year to Rs 351 crore on the back of slower growth in net interest income that increased just 8% to Rs 707 crore.
“The higher cost of funds actually impacted our profit margins,” said Ramnath Pradeep, chairman and managing director, Corporation Bank.
“However, we will try to maintain our current net NIM in FY12. After RBI’s latest rate hike, there is every possibility that lending rates would rise. We have not yet taken any decision on hiking lending rates. Our asset liability committee will meet soon on this.”
Net interest margin (NIM) contracted from 2.48% to 2.10% quarter-on-quarter. Total deposits of the bank reported 29% y-o-y growth to Rs 1,17,782 crore, indicating that the lender have paid higher cost for term deposits.
Total loans grew 22% to Rs 78,904 crore. The bank aims to grow its loan book at 25% in FY12 to reach Rs 1,09,000 crore, focusing on SME and retail loans.
The bank’s overall asset quality has decreased. Its gross non-performing assets (NPAs) increased from 0.91% to 1.07% quarter-on-quarter. Net NPAs inched up from 0.46% to 0.52%.
Source: www.moneycontrol.com
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DENIP consultants Pvt Ltd
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