Corporation Bank has reported marginal 2% increase in Net Profit at Rs 351.26 crore over 9% growth in NII at Rs 833.93 crore in the quarter ended March 12. Dip in the other income by 11% has retarded growth in the net revenues to meager 2% to Rs 1257.23 crore. Further, 34% jump in provisions and contingencies at Rs 337.72 crore has muted growth in PBT. Finally 570 bps dip in effective tax rate at 35.2% has aided 2% growth in the Net Profit.

Asset Quality:

• Asset Quality of the bank has marginally improved on sequential basis but has given no breather. The Slippages stood at 1203 crore for the year while recoveries at Rs 104.25 crore, Up gradations Rs 49.17 crore and write off Rs 565.38 crore. Provision coverage ratio with respect to GNPA stood at 65.30% while that of provision coverage ratio with respect of GNPA at September 2010 was 89.06%.
• Sector wise break up of NPA's is as follows: Agriculture 3.52%, SME 1.42%, large industry 1.09% etc.
• The Outstanding restructured assets at end of March 12 stood at 4.65% (Rs 4670 crore) at end of FY12.

Business Highlights:

• Deposits grew 16.6% to Rs 136142 crore at end of March 12. Average deposits grew at a higher pace of 27% to Rs 118158 crore at end of FY12. CASA deposits constituted Rs 30113 crore and CASA ratio stood at 22.12%.
• Advances book grew 16% to Rs 100469 crore while average advances grew 28% to Rs 82325 crore at end of FY12. Agri advances grew 29.5% to Rs 7140 crore, SME grew 14% to Rs 14340 crore; Retail book grew 29.5% to Rs 20289 crore in FY12. On the other hand, credit to large industries grew 33% to Rs 44921 crore and constituted 45% of the total book.
• Infrastructure credit grew 4.8% to Rs 15574 crore and constituted 30.06% of the total book. Of this, Advances to Power sector grew 29% to Rs 9321 crore and constituted 9.3% of the total book. Telecom exposure de grew 27% to Rs 2621 crore while that of credit to roads and ports grew 63% to Rs 2411 crore. Besides infrastructure, textiles constituted major proportion of loan book at 7.25% of the book and grew 16% to Rs 3755 crore.
• The Bank has missed target for priority sector lending at end of FY12. The total priority sector deployment as % of ANBC stood at 34.44% (ANBC for the bank as on 31 March 11 was Rs 86850 crore) against mandated 40%.
• Significant reliance on wholesale deposits coupled with low CASA deposits resulted in pressurizing cost of deposits and funds. Cost of deposits inched up to 8.03% in quarter under review against 6.40% a year ago. Cost of funds has also inched up to 7.24% against 5.83% in Q4FY11. On the other hand, yield on advances improved to 11.71% in quarter under review against 10.52% a year ago. NIM slipped to 2.41% against 2.66% in Q3FY12 and 2.77% in quarter ended March 11.
• Investments grew 9% to Rs 47619.70 crore with SLR investments growing at healthy pace of 32% to Rs 37146.63 crore. SLR Investments constituted 78% of the total investment book. On the other hand, HTM book constituted 78.68% of the investment book with duration of 5.49 years, AFS at 20.12% of book with duration of 2.89 years.
• Capital Adequacy ratio stood at 14.11% with tier I of 8.33% at end of March 12 against 13% with Tier I of 8.69% at end of March 11.
• The Bank has added 139 branches and 29 ATM's in the year taking total count to 1500 branches and 1274 ATM's at end of FY12.
• ROA stood at 1.21% in FY12 against 1.06% a year ago. On the other hand, ROE also improved to 20.70% in FY12 against 18.20% a year ago.
• Book value per share has stood at Rs 558.69 at end of March 12 against Rs 497.62 in the corresponding previous year. After adjusting for NNPA and restructured assets, Adjusted Book value stood at Rs 421.2 at end of FY12.

Quarterly Performance:

Interest earned grew with slow pace of 9% at Rs 833.93 crore in the quarter ended March 12, as the growth in interest expended outgrew interest earned. Interest earned increased 40% to Rs 3585.88 crore on the back of 43% jump in Interest on advances at Rs 2691.27 crore. On the other hand, interest expended shot up 53% to Rs 2751.95 crore owing to 61% jump in the interest on deposits at Rs 2505.12 crore. The core fee income declined 12.5% to Rs 236.24 crore and lower recoveries dragged noninterest income down by 11% to Rs 423.30 crore. Apart from the core fee income, profit on exchange transactions grew 20% to Rs 42.96 crore; profit on sale of investments grew 17% to Rs 95.60 crore while that of recovery of bad debts and write back declined sharply 50% to Rs 37.79 crore. Resultantly, net total income grew marginally 2% to Rs 1257.23 crore.

The employee cost has declined 28% to Rs 216.07 crore and led operating expenses down 12% to Rs 442.98 crore in the quarter under review. The cost to income ratio has declined sharply 570 bps to 35.2% and led Operating Profit up 12% to Rs 814.26 crore. Provisions and contingencies jumped up 34% to Rs 337.72 crore mainly on the back of 56% jump in the provisions for standard assets at Rs 72 crore. On the other hand, provisions for bad debt marginally inched up 4% to Rs 178.32 crore while there was write back on investment depreciation at Rs 54.95 crore (against charge of Rs 54.53 crore in the previous year). Resultantly, PBT remained flat at Rs 476.54 crore. However, after considering 130 bps dip in effective tax rate at 26.3%, Net Profit was marginally higher by 2% to Rs 351.26 crore.

Yearly Performance:

For the year ended March 12, the bank has reported 7% increase in the Net Profit at Rs 1506.04 crore over 7%increae in NII at Rs 3146.90 crore. Small 9.5% increase in the core fee income at Rs 831.71 crore coupled with 33% jump in the noncore fee income at Rs 660.91 crore has together paved 19% growth in non interest income at Rs 1492.62 crore. While 70 bps dip in cost to income ratio at 38.4% has lifted Operating profit up 12% to Rs 2855.97 crore, sharp jump in provisions and contingencies at Rs 950.46 crore has muted growth in PBT down by 1% to Rs 1905.51 crore. Finally, 590 bps dip in effective tax rate at 21% has pulled Net profit up 7% on y-o-y basis.

On consolidated basis, the bank has reported 7% increase in the net profit at R s1518.39 crore over 7% increase in NII at Rs 3147.21 crore.

Other Information:

The Bank has recommended dividend of Rs 20.50 per share of face value Rs 10 each for FY12.

Corporation Bank: Financial Results